I was in Tunisia last week and lived with the Tunisian people the shocking terrorist attack that occurred at the Bardo Museum on Wednesday March 18. It was a tragic day for Tunisia, for the Middle East and North Africa (MENA) region and for the world at large. It was yet another demonstration of the fragility that not only hampers growth in the region but also threatens global stability and prosperity. Violence and conflict feed the vicious circle leading to economic stagnation and social exclusion that, in turn, lead to even more violence. Today, more than ever, we should all unite to support Tunisia so that it can break this cycle.

Tunisians have demonstrated political courage and determination in the pursuit of a more democratic and inclusive society. The crucible of the Arab Spring, Tunisia has managed to chart a path based on consensus and compromise. It is what sustained a remarkable transition that included the adoption of a historic constitution and culminated in free and fair presidential and parliamentary elections at the end of 2014.

Since 2010, economic activity has remained slow, and even deteriorated along with the social situation. Tunisia’s economy is marked by anemic growth, high fiscal deficits, low investment and rising youth unemployment. In 2014, growth stagnated at 2.3 percent, and large fiscal and current account imbalances have increased since 2010 to reach respectively -6.4 percent and -7.9 percent of GDP. With only moderate rebound in growth expected in 2015, the sizeable fiscal gaps threaten macro-stability and the medium-term scenario remains uncertain, hampered by the fragile security situation and consequent negative impact on investors’ confidence.

Table: Tunisia/Selected Economic Indicators, 2010-2014

Source: Tunisian authorities; IMF staff estimates

Unemployment remains the major source of concern, in particular youth unemployment which has continued to increase from 28.3 percent to 31.2 percent between 2008 and 2013. While the formal private sector did not grow fast enough to absorb the large number of educated young people entering the job market, informal employment soared.

Informality, with its lack of guarantees and regulations, has proved especially inhospitable to women. The female labor force participation rate in Tunisia is less than 25 percent. Along with rising informality, the country has witnessed rising poverty and regional disparities with poverty rates ranging from 8-9 percent in the Center East region and Grand Tunis to a high of 26 percent and 32 percent in the North West and Center West regions.

Unemployment rates are strikingly high among college graduates, underlying the growing mismatch between skills and employment. Each year, only 35,000 jobs are created while at the same time, 60,000 graduates enter the labor market. Of equal concern are the number of young people between the ages of 15 and 29 who are permanently stalled between school and work. As figures above show, the rates for youth who are neither working nor in education or training are high everywhere, but especially pronounced in rural areas, where they climb to 63 percent for women.

This is not only a waste of precious human resources but a major risk for the future of Tunisia. Without an economic stake in the future of the country, an entire generation of frustrated youth will feel increasingly alienated from society; some of whom may be tempted by extremist ideologies.

The Bardo museum attack, through its probable impact on tourism, will make the task of growing the economy and creating greater opportunities more difficult. The tourism industry accounts for more than 12 percent of Tunisia’s GDP, with one in 10 Tunisians employed in the tourism industry and one in five relying on it to make a living. Since 2011, Tunisia witnessed a dramatic dip, with only 6 million tourists in 2014. This is 3 percent less than in 2013 and 12 percent less than in 2010.

While there were signs of recovery in early 2015 (with a 24 percent increase in tourism income compared to 2010), the terrorist attack is likely to take a toll on the entire 2015 summer season. On March 19, the local stock exchange dropped by 2.5 percent and tour operators and cruise companies started cancelling trips to and stops in Tunisia. The launch of an international campaign titled “I will go to Tunisia” is an encouraging reaction. But will it suffice to mitigate the impact on the economy?

Now is the time to support Tunisia and help it to rebuild its economy and create more and better opportunities. Strengthening the economy is fundamental to lift people out of poverty, open a new front against extremism and ultimately fight terrorism. With the Bardo museum reopened , millions continue to look at Tunisia as a beacon of openness and tolerance in the Arab world. The time has now come to put special focus on economic and social reforms that will foster inclusive growth.

The international community has on several occasions committed itself to providing full support to the government and the people of Tunisia. It is time to make good on those promises to encourage economic and social development and ensure that the political transition is accompanied by an economic transition towards shared prosperity.

Authors

I was in Tunisia last week and lived with the Tunisian people the shocking terrorist attack that occurred at the Bardo Museum on Wednesday March 18. It was a tragic day for Tunisia, for the Middle East and North Africa (MENA) region and for the world at large. It was yet another demonstration of the fragility that not only hampers growth in the region but also threatens global stability and prosperity. Violence and conflict feed the vicious circle leading to economic stagnation and social exclusion that, in turn, lead to even more violence. Today, more than ever, we should all unite to support Tunisia so that it can break this cycle.

Tunisians have demonstrated political courage and determination in the pursuit of a more democratic and inclusive society. The crucible of the Arab Spring, Tunisia has managed to chart a path based on consensus and compromise. It is what sustained a remarkable transition that included the adoption of a historic constitution and culminated in free and fair presidential and parliamentary elections at the end of 2014.

Since 2010, economic activity has remained slow, and even deteriorated along with the social situation. Tunisia’s economy is marked by anemic growth, high fiscal deficits, low investment and rising youth unemployment. In 2014, growth stagnated at 2.3 percent, and large fiscal and current account imbalances have increased since 2010 to reach respectively -6.4 percent and -7.9 percent of GDP. With only moderate rebound in growth expected in 2015, the sizeable fiscal gaps threaten macro-stability and the medium-term scenario remains uncertain, hampered by the fragile security situation and consequent negative impact on investors’ confidence.

Table: Tunisia/Selected Economic Indicators, 2010-2014

Source: Tunisian authorities; IMF staff estimates

Unemployment remains the major source of concern, in particular youth unemployment which has continued to increase from 28.3 percent to 31.2 percent between 2008 and 2013. While the formal private sector did not grow fast enough to absorb the large number of educated young people entering the job market, informal employment soared.

Informality, with its lack of guarantees and regulations, has proved especially inhospitable to women. The female labor force participation rate in Tunisia is less than 25 percent. Along with rising informality, the country has witnessed rising poverty and regional disparities with poverty rates ranging from 8-9 percent in the Center East region and Grand Tunis to a high of 26 percent and 32 percent in the North West and Center West regions.

Unemployment rates are strikingly high among college graduates, underlying the growing mismatch between skills and employment. Each year, only 35,000 jobs are created while at the same time, 60,000 graduates enter the labor market. Of equal concern are the number of young people between the ages of 15 and 29 who are permanently stalled between school and work. As figures above show, the rates for youth who are neither working nor in education or training are high everywhere, but especially pronounced in rural areas, where they climb to 63 percent for women.

This is not only a waste of precious human resources but a major risk for the future of Tunisia. Without an economic stake in the future of the country, an entire generation of frustrated youth will feel increasingly alienated from society; some of whom may be tempted by extremist ideologies.

The Bardo museum attack, through its probable impact on tourism, will make the task of growing the economy and creating greater opportunities more difficult. The tourism industry accounts for more than 12 percent of Tunisia’s GDP, with one in 10 Tunisians employed in the tourism industry and one in five relying on it to make a living. Since 2011, Tunisia witnessed a dramatic dip, with only 6 million tourists in 2014. This is 3 percent less than in 2013 and 12 percent less than in 2010.

While there were signs of recovery in early 2015 (with a 24 percent increase in tourism income compared to 2010), the terrorist attack is likely to take a toll on the entire 2015 summer season. On March 19, the local stock exchange dropped by 2.5 percent and tour operators and cruise companies started cancelling trips to and stops in Tunisia. The launch of an international campaign titled “I will go to Tunisia” is an encouraging reaction. But will it suffice to mitigate the impact on the economy?

Now is the time to support Tunisia and help it to rebuild its economy and create more and better opportunities. Strengthening the economy is fundamental to lift people out of poverty, open a new front against extremism and ultimately fight terrorism. With the Bardo museum reopened , millions continue to look at Tunisia as a beacon of openness and tolerance in the Arab world. The time has now come to put special focus on economic and social reforms that will foster inclusive growth.

The international community has on several occasions committed itself to providing full support to the government and the people of Tunisia. It is time to make good on those promises to encourage economic and social development and ensure that the political transition is accompanied by an economic transition towards shared prosperity.

Authors

]]>
http://www.brookings.edu/research/papers/2015/02/agriculture-development-inclusive-growth-food-security-morocco-ghanem?rssid=ghanemh{471DFBEE-6E63-426A-ABBE-02BCF21AF130}http://webfeeds.brookings.edu/~/85965622/0/brookingsrss/experts/ghanemh~Agriculture-and-rural-development-for-inclusive-growth-and-food-security-in-MoroccoAgriculture and rural development for inclusive growth and food security in Morocco

Morocco has so far been a success story in the Arab world. It has followed a gradual approach to political reforms and democratization, which led to the adoption of a new constitution and the holding of free parliamentary elections in 2011. At the same time, economic growth averaged 4.5 percent between 2000 and 2010, reached 5.0 percent in 2011, 2.7 percent in 2012, and 4.4 percent in 2013. That is, Morocco has avoided the political upheavals and economic meltdowns that plagued other Arab Countries in Transition (ACTs). Maintaining this record of success will require continued political and economic reforms.

On the economic side, the focus needs to be on enhancing inclusiveness and ensuring that the benefits of growth are widely shared. More than 40 percent of Moroccans live in rural areas and depend, directly or indirectly, on agriculture for their livelihood. They also happen to be much poorer than those living in urban areas. And, rural poverty is three times higher than urban poverty. Experience from around the world indicates that as Morocco continues to grow, more and more people will migrate from the countryside to cities. Hence, an inclusive growth strategy needs to include investments in urban infrastructure as well as programs to increase urban employment.

At the same time, more needs to be done to increase rural living standards, reduce regional income differentials and lower the rate of rural-urban migration, while concomitantly increasing agricultural production and enhancing Morocco’s food and nutrition security. The Government of Morocco is implementing a rural development strategy with two pillars: the first pillar focuses on large modern farms, and the second pillar focuses on smallholder and family farming.

This paper argues that the twin goals of inclusive growth and food security would be best achieved by emphasizing the importance of the second pillar, and by adopting an approach that includes: (i) increasing food reserves and using financial markets for risk reduction, (ii) improving the linkage of smallholders and family farmers to markets and help them increase domestic food production while raising their incomes, and (iii) supporting the development of independent producer organizations that provide voice for smallholders and also help them gain better access to input and output markets.

Authors

Morocco has so far been a success story in the Arab world. It has followed a gradual approach to political reforms and democratization, which led to the adoption of a new constitution and the holding of free parliamentary elections in 2011. At the same time, economic growth averaged 4.5 percent between 2000 and 2010, reached 5.0 percent in 2011, 2.7 percent in 2012, and 4.4 percent in 2013. That is, Morocco has avoided the political upheavals and economic meltdowns that plagued other Arab Countries in Transition (ACTs). Maintaining this record of success will require continued political and economic reforms.

On the economic side, the focus needs to be on enhancing inclusiveness and ensuring that the benefits of growth are widely shared. More than 40 percent of Moroccans live in rural areas and depend, directly or indirectly, on agriculture for their livelihood. They also happen to be much poorer than those living in urban areas. And, rural poverty is three times higher than urban poverty. Experience from around the world indicates that as Morocco continues to grow, more and more people will migrate from the countryside to cities. Hence, an inclusive growth strategy needs to include investments in urban infrastructure as well as programs to increase urban employment.

At the same time, more needs to be done to increase rural living standards, reduce regional income differentials and lower the rate of rural-urban migration, while concomitantly increasing agricultural production and enhancing Morocco’s food and nutrition security. The Government of Morocco is implementing a rural development strategy with two pillars: the first pillar focuses on large modern farms, and the second pillar focuses on smallholder and family farming.

This paper argues that the twin goals of inclusive growth and food security would be best achieved by emphasizing the importance of the second pillar, and by adopting an approach that includes: (i) increasing food reserves and using financial markets for risk reduction, (ii) improving the linkage of smallholders and family farmers to markets and help them increase domestic food production while raising their incomes, and (iii) supporting the development of independent producer organizations that provide voice for smallholders and also help them gain better access to input and output markets.

]]>
http://www.brookings.edu/blogs/up-front/posts/2014/07/25-egypt-social-protection-system-ghanem?rssid=ghanemh{38AF2194-5FCB-4C92-859D-FBF6EE6298C1}http://webfeeds.brookings.edu/~/70139324/0/brookingsrss/experts/ghanemh~Egypt-Needs-a-New-Social-Protection-SystemEgypt Needs a New Social Protection System

In his speech this week commemorating the July 23rd 1952 revolution President El-Sisi stated: “all my appreciation, gratitude and respect for Egyptians’ reaction to the cut in energy subsidies and the reduction in the budget deficit. It is a harsh policy measure but a necessary one and the government is trying to protect the poor.

Egypt’s Hard Economic Choices

Mr. El-Sisi is right to praise his people. So far Egyptians have shown tremendous resilience and understanding of political and economic imperatives. But it is not clear how long this will last nor how much more hardship they will accept. Therefore, the government should consider moving quickly to put in place an efficient social protection system to cushion the impact of ongoing and future economic reforms on the poor and the middle class.

Egypt’s budget for the fiscal year starting July 1, 2014 includes significant cuts in energy subsidies. As a result, petrol prices rose by 78 percent, diesel rose by 64 percent and natural gas prices rose by 175 percent. The government also started implementing electricity price increases that aim to double electricity prices over a five year period. In fact, additional price increases are to be expected in the coming years, because the government will continue to pay out energy subsidies of some 100 billion Egyptian pounds (about 14 billion US dollars) a year even after the most recent price increases, which is probably not sustainable.

Reducing energy subsidies is a step in the right direction, and it demonstrates the new administration’s ability to make hard choices. It is a step that should have been taken many years back. However, past governments lacked the political courage required to adopt such a potentially unpopular policy. The El-Sisi administration has so far succeeded in avoiding a popular backlash in part by arguing that it has no other choice if it is to avoid a serious macro-economic crisis.

It is true that the government has limited options. The budget deficit has reached nearly 14 percent of GDP in the fiscal year ending June 30th and the public debt is almost 90 percent of GDP. Price subsidies are slightly less than 9 percent of GDP, or more than one-quarter of total government spending. Energy subsidies alone are close to 7 percent of GDP. It is hard to see how Egypt can avoid macro-economic collapse without reducing, or even eliminating, those subsidies.

Toward a New Social Contract

But crises can also give rise to opportunities. It may be time for Egypt to overhaul its archaic safety net system and develop a new social contract that reflects the realities of the 21st century.

Over the last two decades many middle-income countries (e.g. Brazil and Mexico) shifted to social protection systems based on targeted cash transfers, but Egypt maintained its system based on generalized price subsidies. This is the system adopted by President Nasser more than 50 years ago, and it involves subsidizing prices of a number of commodities (including fuel, electricity, bread, rice, edible oil, tea and sugar).

Generalized price subsidies are part of what has come to be known as the autocratic bargain or the autocratic social contract. This included free health and education, government jobs for all graduates and low prices for necessities, but limited political and civil liberties. The January 2011 revolution and the fall of President Mubarak demonstrated the limits of that arrangement, and highlighted the need for developing a new social contract—a contract which is consistent with a market economy and which responds to youth demands for freedom, dignity and social justice.

Social protection based on generalized price subsidies may (or may not) have worked in the 1960s, but it is certainly not working now. In addition to their high budgetary cost, price subsidies fail to target those who really need them. For example, the poorest 40 percent of the population receive only 3 percent of the subsidy on gasoline, 7 percent of the subsidy on natural gas and 10 percent of diesel subsidies. Moreover, they encourage over-consumption of the subsidized goods. Egypt’s economy has thus become more energy intensive than most advanced country economies, with negative consequences for economic efficiency and environmental sustainability.

This does not mean, however, that the poor and the middle class are not being hurt by the subsidy removal. They are affected in at least two ways. First, prices of most goods will rise because of the increase in transport costs. Already taxi fares in Cairo have risen by about 50 percent. Second, industry (especially energy intensive industries like iron and steel, cement, pharmaceuticals and fertilizers) will see their costs rise which may affect their ability to expand and hire new workers, unless they are able to pass on cost increases to consumers. Again, the poor and middle class are bound to be impacted.

The government is aware of those potential impacts and of the associated political risks. It is trying to protect the poor from price increases, but it is not clear that its efforts will be effective. Government is increasing its surveillance of markets to ensure that there is no “unreasonable” increase in prices. However, experiences from around the world indicate that when governments try to intervene to fix prices they make matters worse, because they create shortages and encourage the development of a black market. The Government has also announced that about 69 million people who hold ration cards will have access to 20 subsidized consumption items. That may be a good short-term solution. However, Egypt’s own experience indicates that subsidizing consumption goods is almost always associated with waste, leakage and corruption. And, already people are grumbling that some of the subsidized goods are missing from shelves.

The idea of putting in place a social protection system based on targeted cash transfers has been studied in Egypt for several years, and could be quickly implemented. Experience from around the world indicates that such a system is much less expensive, more efficient and fairer than price subsidies. The Egyptian government should consider moving ahead quickly to put such a system in place. It makes economic as well as political sense. It would be one way of responding to demands for greater social justice, and would make implementation of future reforms and further subsidy reductions much easier.

Authors

In his speech this week commemorating the July 23rd 1952 revolution President El-Sisi stated: “all my appreciation, gratitude and respect for Egyptians’ reaction to the cut in energy subsidies and the reduction in the budget deficit. It is a harsh policy measure but a necessary one and the government is trying to protect the poor.

Egypt’s Hard Economic Choices

Mr. El-Sisi is right to praise his people. So far Egyptians have shown tremendous resilience and understanding of political and economic imperatives. But it is not clear how long this will last nor how much more hardship they will accept. Therefore, the government should consider moving quickly to put in place an efficient social protection system to cushion the impact of ongoing and future economic reforms on the poor and the middle class.

Egypt’s budget for the fiscal year starting July 1, 2014 includes significant cuts in energy subsidies. As a result, petrol prices rose by 78 percent, diesel rose by 64 percent and natural gas prices rose by 175 percent. The government also started implementing electricity price increases that aim to double electricity prices over a five year period. In fact, additional price increases are to be expected in the coming years, because the government will continue to pay out energy subsidies of some 100 billion Egyptian pounds (about 14 billion US dollars) a year even after the most recent price increases, which is probably not sustainable.

Reducing energy subsidies is a step in the right direction, and it demonstrates the new administration’s ability to make hard choices. It is a step that should have been taken many years back. However, past governments lacked the political courage required to adopt such a potentially unpopular policy. The El-Sisi administration has so far succeeded in avoiding a popular backlash in part by arguing that it has no other choice if it is to avoid a serious macro-economic crisis.

It is true that the government has limited options. The budget deficit has reached nearly 14 percent of GDP in the fiscal year ending June 30th and the public debt is almost 90 percent of GDP. Price subsidies are slightly less than 9 percent of GDP, or more than one-quarter of total government spending. Energy subsidies alone are close to 7 percent of GDP. It is hard to see how Egypt can avoid macro-economic collapse without reducing, or even eliminating, those subsidies.

Toward a New Social Contract

But crises can also give rise to opportunities. It may be time for Egypt to overhaul its archaic safety net system and develop a new social contract that reflects the realities of the 21st century.

Over the last two decades many middle-income countries (e.g. Brazil and Mexico) shifted to social protection systems based on targeted cash transfers, but Egypt maintained its system based on generalized price subsidies. This is the system adopted by President Nasser more than 50 years ago, and it involves subsidizing prices of a number of commodities (including fuel, electricity, bread, rice, edible oil, tea and sugar).

Generalized price subsidies are part of what has come to be known as the autocratic bargain or the autocratic social contract. This included free health and education, government jobs for all graduates and low prices for necessities, but limited political and civil liberties. The January 2011 revolution and the fall of President Mubarak demonstrated the limits of that arrangement, and highlighted the need for developing a new social contract—a contract which is consistent with a market economy and which responds to youth demands for freedom, dignity and social justice.

Social protection based on generalized price subsidies may (or may not) have worked in the 1960s, but it is certainly not working now. In addition to their high budgetary cost, price subsidies fail to target those who really need them. For example, the poorest 40 percent of the population receive only 3 percent of the subsidy on gasoline, 7 percent of the subsidy on natural gas and 10 percent of diesel subsidies. Moreover, they encourage over-consumption of the subsidized goods. Egypt’s economy has thus become more energy intensive than most advanced country economies, with negative consequences for economic efficiency and environmental sustainability.

This does not mean, however, that the poor and the middle class are not being hurt by the subsidy removal. They are affected in at least two ways. First, prices of most goods will rise because of the increase in transport costs. Already taxi fares in Cairo have risen by about 50 percent. Second, industry (especially energy intensive industries like iron and steel, cement, pharmaceuticals and fertilizers) will see their costs rise which may affect their ability to expand and hire new workers, unless they are able to pass on cost increases to consumers. Again, the poor and middle class are bound to be impacted.

The government is aware of those potential impacts and of the associated political risks. It is trying to protect the poor from price increases, but it is not clear that its efforts will be effective. Government is increasing its surveillance of markets to ensure that there is no “unreasonable” increase in prices. However, experiences from around the world indicate that when governments try to intervene to fix prices they make matters worse, because they create shortages and encourage the development of a black market. The Government has also announced that about 69 million people who hold ration cards will have access to 20 subsidized consumption items. That may be a good short-term solution. However, Egypt’s own experience indicates that subsidizing consumption goods is almost always associated with waste, leakage and corruption. And, already people are grumbling that some of the subsidized goods are missing from shelves.

The idea of putting in place a social protection system based on targeted cash transfers has been studied in Egypt for several years, and could be quickly implemented. Experience from around the world indicates that such a system is much less expensive, more efficient and fairer than price subsidies. The Egyptian government should consider moving ahead quickly to put such a system in place. It makes economic as well as political sense. It would be one way of responding to demands for greater social justice, and would make implementation of future reforms and further subsidy reductions much easier.

I have recently returned from Cairo with the feeling that Egyptians may need to be reminded of Albert Einstein’s definition of insanity as “doing the same thing over and over again and expecting different results.”Following the same economic policies that contributed to the fall of the Mubarak regime over again would probably lead to discontent and political instability--maybe even another revolution with all the human and economic costs that this entails. It is important that the El-Sisi administration adopt a new economic strategy that gives Egyptians hope for a better future, and avoids repeating past mistakes.

A recent Pew Center survey shows that 82 percent of Egyptians believe that “improving the economy is very important for Egypt’s future,” which is more than double those who say the same thing about religious freedom, the right to peaceful protest, or civilian control of the military. This does not necessarily mean that those other issues are not important for Egyptians. The same survey shows that a majority of Egyptians continue to believe that democracy is the best form of government. However, this result does mean that fixing the economy is Egyptians’ top short-term priority.

It is legitimate to ask: what would be wrong with a return to Mubarak era economic policies? After all, during the ten year period leading to the January 25, 2011 revolution, the Egyptian economy was doing well.GDP was growing at 5-7 percent a year while the current account was under control and foreign reserves were high. This strong performance continued even during the global financial crisis. But this growth was far from inclusive. Mubarak-era economic policies increased the gulf between a struggling middle class and the elite.

Recent research [1] has identified 469 firms that were directly or indirectly owned by businessmen close to the Mubarak regime. Those politically-connected firms have been able to take control of a large part of Egypt’s formal private sector. Before the 2011 revolution, their revenues represented about 55 percent of total private sector revenue while their employment represented only 11 percent of private sector employment.

Politically-connected firms grew faster than other firms and became much larger (their average revenue was four times higher than the sector average) because they were able to capture government protection and subsidies, many of them in energy intensive sectors. This allowed them to increase their market shares relative to competitors and to leverage their equity with a dominant access to the capital market. Growth of those politically-connected firms was at the expense of small and medium enterprises, and hence at the expense of the middle class.

According to estimates carried out at the Brookings Institution the number of people living below the middle-class level (and thus may be considered poor) increased from 60 million in 2000 to 63 million in 2010.

The Egyptian middle class did not expand rapidly enough during the period 2000-10, the last decade of the Mubarak regime. According to estimates carried out at the Brookings Institution
[2]
the number of people living below the middle-class level (and thus may be considered poor) increased from 60 million in 2000 to 63 million in 2010. Moreover, a large proportion of the middle class was trapped in lower middle class status, living very close to the poverty line.

Failure to raise the standards of living of the poor and especially the lower middle class distinguishes Egypt’s pre-2011 economic performance from that of successful developing countries. World Bank data shows that the proportion of Egyptians living on less than $5 a day has been stagnant at around 85 percent during the first decade of the 21st century, and their absolute number increased from 57 to 66 million. During the same period Brazil reduced its proportion from 52 to 36 percent, China from 93 to 72 percent, and South Africa from 72 to 62 percent. The absolute number of people living on less than $5 a day declined from 92 to 72 million in Brazil, from 1.1 billion to 950 million in China and from 32 to 30 million in South Africa.

The fact that 85 percent of Egyptians remained trapped in poverty or lower middle class status (living on less than $5 a day) could, at least partly, explain why the majority of Egyptians were dissatisfied in spite of economic growth. They saw a small politically-connected group benefit from economic growth while they remained, for all intents and purposes, poor.

Of course it is possible to argue that given enough time the benefits of growth would have “trickled down” to the lower middle class and the poor. Regardless of whether “trickle down” actually works, this is unlikely to be a politically feasible alternative. People do not seem to be willing to wait. They want their living standards to improve now.

All of this means that the newly-elected El-Sisi administration needs to prioritize expanding the middle class and removing the policy bias against small and medium enterprises. This is clearly a difficult task that will require time as it involves legal and regulatory reforms, as well as instititutional development and the control of corruption.

Such a program cannot be implemented if large businesses continue to monopolize the policy debate and access to decision makers. Therefore, as a first step it is necessary to develop ways of providing voice to small businesses and other representatives of the middle class so that they can fully participate in policy discussions. Alone, giving those groups voice will not lead to more inclusive growth and an expansion of the middle class, but it would be a good start for the new administration as it would provide a strong signal of its desire to change the course of the Egyptian economy.

[1] See Diwan I., Keefer P., and Schiffbauer, M. (2013), The Effect of Cronyism on Private Sector Growth in Egypt, Mimeo, The World Bank: Washington DC.

[2] For more on the different estimates of the Egyptian middle-class and its evolution over time, see Ghanem, H. (2013), The role of Micro and Small Enterprises in Egypt’s Economic Transition. The Brookings Institution: Washington DC.

Authors

I have recently returned from Cairo with the feeling that Egyptians may need to be reminded of Albert Einstein’s definition of insanity as “doing the same thing over and over again and expecting different results.”Following the same economic policies that contributed to the fall of the Mubarak regime over again would probably lead to discontent and political instability--maybe even another revolution with all the human and economic costs that this entails. It is important that the El-Sisi administration adopt a new economic strategy that gives Egyptians hope for a better future, and avoids repeating past mistakes.

A recent Pew Center survey shows that 82 percent of Egyptians believe that “improving the economy is very important for Egypt’s future,” which is more than double those who say the same thing about religious freedom, the right to peaceful protest, or civilian control of the military. This does not necessarily mean that those other issues are not important for Egyptians. The same survey shows that a majority of Egyptians continue to believe that democracy is the best form of government. However, this result does mean that fixing the economy is Egyptians’ top short-term priority.

It is legitimate to ask: what would be wrong with a return to Mubarak era economic policies? After all, during the ten year period leading to the January 25, 2011 revolution, the Egyptian economy was doing well.GDP was growing at 5-7 percent a year while the current account was under control and foreign reserves were high. This strong performance continued even during the global financial crisis. But this growth was far from inclusive. Mubarak-era economic policies increased the gulf between a struggling middle class and the elite.

Recent research [1] has identified 469 firms that were directly or indirectly owned by businessmen close to the Mubarak regime. Those politically-connected firms have been able to take control of a large part of Egypt’s formal private sector. Before the 2011 revolution, their revenues represented about 55 percent of total private sector revenue while their employment represented only 11 percent of private sector employment.

Politically-connected firms grew faster than other firms and became much larger (their average revenue was four times higher than the sector average) because they were able to capture government protection and subsidies, many of them in energy intensive sectors. This allowed them to increase their market shares relative to competitors and to leverage their equity with a dominant access to the capital market. Growth of those politically-connected firms was at the expense of small and medium enterprises, and hence at the expense of the middle class.

According to estimates carried out at the Brookings Institution the number of people living below the middle-class level (and thus may be considered poor) increased from 60 million in 2000 to 63 million in 2010.

The Egyptian middle class did not expand rapidly enough during the period 2000-10, the last decade of the Mubarak regime. According to estimates carried out at the Brookings Institution
[2]
the number of people living below the middle-class level (and thus may be considered poor) increased from 60 million in 2000 to 63 million in 2010. Moreover, a large proportion of the middle class was trapped in lower middle class status, living very close to the poverty line.

Failure to raise the standards of living of the poor and especially the lower middle class distinguishes Egypt’s pre-2011 economic performance from that of successful developing countries. World Bank data shows that the proportion of Egyptians living on less than $5 a day has been stagnant at around 85 percent during the first decade of the 21st century, and their absolute number increased from 57 to 66 million. During the same period Brazil reduced its proportion from 52 to 36 percent, China from 93 to 72 percent, and South Africa from 72 to 62 percent. The absolute number of people living on less than $5 a day declined from 92 to 72 million in Brazil, from 1.1 billion to 950 million in China and from 32 to 30 million in South Africa.

The fact that 85 percent of Egyptians remained trapped in poverty or lower middle class status (living on less than $5 a day) could, at least partly, explain why the majority of Egyptians were dissatisfied in spite of economic growth. They saw a small politically-connected group benefit from economic growth while they remained, for all intents and purposes, poor.

Of course it is possible to argue that given enough time the benefits of growth would have “trickled down” to the lower middle class and the poor. Regardless of whether “trickle down” actually works, this is unlikely to be a politically feasible alternative. People do not seem to be willing to wait. They want their living standards to improve now.

All of this means that the newly-elected El-Sisi administration needs to prioritize expanding the middle class and removing the policy bias against small and medium enterprises. This is clearly a difficult task that will require time as it involves legal and regulatory reforms, as well as instititutional development and the control of corruption.

Such a program cannot be implemented if large businesses continue to monopolize the policy debate and access to decision makers. Therefore, as a first step it is necessary to develop ways of providing voice to small businesses and other representatives of the middle class so that they can fully participate in policy discussions. Alone, giving those groups voice will not lead to more inclusive growth and an expansion of the middle class, but it would be a good start for the new administration as it would provide a strong signal of its desire to change the course of the Egyptian economy.

[1] See Diwan I., Keefer P., and Schiffbauer, M. (2013), The Effect of Cronyism on Private Sector Growth in Egypt, Mimeo, The World Bank: Washington DC.

[2] For more on the different estimates of the Egyptian middle-class and its evolution over time, see Ghanem, H. (2013), The role of Micro and Small Enterprises in Egypt’s Economic Transition. The Brookings Institution: Washington DC.

It is easy to be negative about recent developments in the Arab World, and to call on the international community to disengage. Except for Tunisia, all of the Arab countries in transition are facing serious challenges. Syria is in the midst of a civil war. Libya appears to be descending into anarchy. The revolution in Bahrain degenerated into a Shia-Sunni conflict and was put down by force. Yemen is locked in a fight against al-Qaeda as well as against separatist groups. Egypt is waging its own “war on terror” with worrying consequences for democracy and human rights. Morocco and Jordan remain a long way from developing into full-fledged constitutional monarchies.

But it is probably a mistake to call on the international community to withdraw its support. It should come as no surprise that Arab transitions are turning out to be long and difficult. A book produced by a group of scholars at Brookings in early-2012 (when the whole world was still euphoric about the Arab Spring) said exactly that.[1] It recommended that the international community take a patient and long-term view of Arab transitions.

There is still hope for Arab democracy. For decades, and even centuries, Arab countries were stuck in autocratic political systems. The Arab World seemed to be a backwater untouched by the great political, social and economic developments taking place elsewhere in the world over the last three decades. It seemed destined to remain forever stuck in the mid-20th century. The Arab revolutions of 2010-11 changed all that.

The old autocratic social contract (bread vs. freedom) has been broken. Arabs are demanding more bread and more freedom. The revolutions have opened a window of opportunity for Arab societies to join the 21st century, to develop new social contracts that respect individual freedoms and human dignity, while also focusing on economic development and social justice.

This window of opportunity will remain open over the medium-term because the revolutions have propelled youth groups to the center of the political scene. Arab youth (60 percent of the region’s population is less than 25 years old) are leading the fight against autocracy, and have reaffirmed their belief in the universal values of liberty, equality and dignity. They are demanding the reform of Arab governance systems, which they consider to be responsible for injustices, and corruption. Some governments are trying to repress the youth movement, but history indicates that this never works.

The Arab Spring started in Tunisia, and it continues to lead the way. Tunisia’s new constitution enshrines the new values that Arab youth insist upon: liberty, equality, justice, dignity and citizenship.

The Arab Spring started in Tunisia, and it continues to lead the way. Tunisia’s new constitution enshrines the new values that Arab youth insist upon: liberty, equality, justice, dignity and citizenship. The Tunisian constitutional process was long and difficult, but in the end a compromise was reached, thanks to the intervention of strong civil society institutions, notably the labor unions.

Morocco’s experiment of gradual reform led by the palace could eventually also prove successful. Morocco has passed a new, and more democratic, constitution. It carried out free elections and the leader of the party that won a plurality in parliament is heading a coalition government. However, the government remains weak, and there continues to be dissatisfaction with the formal political process. Therefore, it is likely that further democratic reforms will be needed in Morocco.

Egypt, the largest Arab country, has traditionally been the trend setter in the region. That is why the recent political turmoil and violence are serious causes for concern. But Egypt’s problems should not conceal the fact that there has been some progress toward democracy. A new constitution has been passed which, if applied properly, protects freedom, diversity and equality of all citizens. Presidential elections are scheduled for the last week of May. Most observers believe that the outcome of those elections is a foregone conclusion. Nevertheless, they have engendered a real public debate about the future of the country between two strong, and popular, presidential contenders.

Egypt has a long way to go. It will probably take years, even decades, to build the necessary democratic institutions, improve some key existing institutions like the judiciary and the police, and change the country’s autocratic political culture. The challenges are huge. Nevertheless, given the profound changes that have already taken place in Egyptian society, it appears likely that the country will continue on the road to democracy.

How can the international community help? It can prioritize support to inclusive and democratic institutions. Inclusive institutions are necessary for democracy as well as for economic growth and social justice. Libya’s problems today reflect the fact that there are no well-functioning institutions in the country. Egypt is facing challenges, because its only strong institution is the military. Morocco has been able to choose an evolutionary path towards full democracy, because the palace is a strong and credible institution that can lead the process. Tunisia has been more successful than its neighbors because it has strong civil society institutions.

Good governance, defined as the extent to which the institutions and processes of government provide decision makers an incentive to be responsive to citizens, is also important for economic growth and equity. The main explanation for different economic outcomes among countries is different institutions. Inclusive institutions lead to the creation of inclusive markets that support growth and equality of opportunity. Conversely, extractive institutions stifle entrepreneurship and creativity and thus lead to low growth and high inequality.[2]

Arab countries in transition are facing huge opportunities, but also huge challenges. The revolutions have broken a wall of fear, and have destroyed the old autocratic social contract.

The Arab lower middle class and the poor have had no voice in economic decision making. This could explain why their interests were not served by economic policies. Inclusive economic institutions that would give voice to ordinary citizens, including the poor, in economic policy making, and empower them to hold government officials accountable, would increase the probability that an agenda for achieving social justice is actually adopted and implemented.

In the short term, the focus could be on building inclusive economic institutions that are important for growth and equity as well as for democracy. This would include strengthening labor unions, farmer organizations (particularly those that group smallholders and family farmers), and other civil society organizations to ensure that workers, smallholder farmers and other marginalized stakeholders have a voice in economic and political debates. It would also include support to finance and planning ministries to change decision making processes so that they include broad-based consultations, as well as reforms of the civil service and government processes so that they are more responsive to citizen demands.

Some members of the international community are well equipped to provide support to better governance and institutional development. For example, the United Nations Development Program has a mandate in the area of governance that includes the principles of transparency, voice, and accountability. The Food and Agriculture Organization of the United Nations has a great deal of experience in supporting farming organizations, while the International Labor Organization has traditionally worked with labor unions. UN agencies are viewed as politically neutral and therefore can provide needed support to NGOs, legislatures, and the free press without being accused of political meddling. The International Monetary Fund and the World Bank also have vast experience in supporting institutional development, particularly through reforms of public financial management and civil service reforms. The Japan International Cooperation Agency is already working with the Egyptian government to support inclusive planning. The objective is to enhance the transparency of economic policy-making, and provide greater voice to different stakeholders as they participate in the planning process.

Arab countries in transition are facing huge opportunities, but also huge challenges. The revolutions have broken a wall of fear, and have destroyed the old autocratic social contract. Arab societies are adopting universal values of liberty, dignity, equality and justice. But the transitions are proving to be long and very difficult. The international community could play an important role. Supporting the emergence of new, inclusive economic institutions would be an important contribution to democratization as well as to social justice in the Arab World.

[1] Amin, M. and others (2012), After the Spring: Economic Transitions in the Arab World, Oxford University Press: Oxford.

[2] See Acemoglu, D. and J. Robinson (2012) Why Nations Fail: the Origins of Power, Prosperity and Poverty. Crown Publishers: New York

Authors

It is easy to be negative about recent developments in the Arab World, and to call on the international community to disengage. Except for Tunisia, all of the Arab countries in transition are facing serious challenges. Syria is in the midst of a civil war. Libya appears to be descending into anarchy. The revolution in Bahrain degenerated into a Shia-Sunni conflict and was put down by force. Yemen is locked in a fight against al-Qaeda as well as against separatist groups. Egypt is waging its own “war on terror” with worrying consequences for democracy and human rights. Morocco and Jordan remain a long way from developing into full-fledged constitutional monarchies.

But it is probably a mistake to call on the international community to withdraw its support. It should come as no surprise that Arab transitions are turning out to be long and difficult. A book produced by a group of scholars at Brookings in early-2012 (when the whole world was still euphoric about the Arab Spring) said exactly that.[1] It recommended that the international community take a patient and long-term view of Arab transitions.

There is still hope for Arab democracy. For decades, and even centuries, Arab countries were stuck in autocratic political systems. The Arab World seemed to be a backwater untouched by the great political, social and economic developments taking place elsewhere in the world over the last three decades. It seemed destined to remain forever stuck in the mid-20th century. The Arab revolutions of 2010-11 changed all that.

The old autocratic social contract (bread vs. freedom) has been broken. Arabs are demanding more bread and more freedom. The revolutions have opened a window of opportunity for Arab societies to join the 21st century, to develop new social contracts that respect individual freedoms and human dignity, while also focusing on economic development and social justice.

This window of opportunity will remain open over the medium-term because the revolutions have propelled youth groups to the center of the political scene. Arab youth (60 percent of the region’s population is less than 25 years old) are leading the fight against autocracy, and have reaffirmed their belief in the universal values of liberty, equality and dignity. They are demanding the reform of Arab governance systems, which they consider to be responsible for injustices, and corruption. Some governments are trying to repress the youth movement, but history indicates that this never works.

The Arab Spring started in Tunisia, and it continues to lead the way. Tunisia’s new constitution enshrines the new values that Arab youth insist upon: liberty, equality, justice, dignity and citizenship.

The Arab Spring started in Tunisia, and it continues to lead the way. Tunisia’s new constitution enshrines the new values that Arab youth insist upon: liberty, equality, justice, dignity and citizenship. The Tunisian constitutional process was long and difficult, but in the end a compromise was reached, thanks to the intervention of strong civil society institutions, notably the labor unions.

Morocco’s experiment of gradual reform led by the palace could eventually also prove successful. Morocco has passed a new, and more democratic, constitution. It carried out free elections and the leader of the party that won a plurality in parliament is heading a coalition government. However, the government remains weak, and there continues to be dissatisfaction with the formal political process. Therefore, it is likely that further democratic reforms will be needed in Morocco.

Egypt, the largest Arab country, has traditionally been the trend setter in the region. That is why the recent political turmoil and violence are serious causes for concern. But Egypt’s problems should not conceal the fact that there has been some progress toward democracy. A new constitution has been passed which, if applied properly, protects freedom, diversity and equality of all citizens. Presidential elections are scheduled for the last week of May. Most observers believe that the outcome of those elections is a foregone conclusion. Nevertheless, they have engendered a real public debate about the future of the country between two strong, and popular, presidential contenders.

Egypt has a long way to go. It will probably take years, even decades, to build the necessary democratic institutions, improve some key existing institutions like the judiciary and the police, and change the country’s autocratic political culture. The challenges are huge. Nevertheless, given the profound changes that have already taken place in Egyptian society, it appears likely that the country will continue on the road to democracy.

How can the international community help? It can prioritize support to inclusive and democratic institutions. Inclusive institutions are necessary for democracy as well as for economic growth and social justice. Libya’s problems today reflect the fact that there are no well-functioning institutions in the country. Egypt is facing challenges, because its only strong institution is the military. Morocco has been able to choose an evolutionary path towards full democracy, because the palace is a strong and credible institution that can lead the process. Tunisia has been more successful than its neighbors because it has strong civil society institutions.

Good governance, defined as the extent to which the institutions and processes of government provide decision makers an incentive to be responsive to citizens, is also important for economic growth and equity. The main explanation for different economic outcomes among countries is different institutions. Inclusive institutions lead to the creation of inclusive markets that support growth and equality of opportunity. Conversely, extractive institutions stifle entrepreneurship and creativity and thus lead to low growth and high inequality.[2]

Arab countries in transition are facing huge opportunities, but also huge challenges. The revolutions have broken a wall of fear, and have destroyed the old autocratic social contract.

The Arab lower middle class and the poor have had no voice in economic decision making. This could explain why their interests were not served by economic policies. Inclusive economic institutions that would give voice to ordinary citizens, including the poor, in economic policy making, and empower them to hold government officials accountable, would increase the probability that an agenda for achieving social justice is actually adopted and implemented.

In the short term, the focus could be on building inclusive economic institutions that are important for growth and equity as well as for democracy. This would include strengthening labor unions, farmer organizations (particularly those that group smallholders and family farmers), and other civil society organizations to ensure that workers, smallholder farmers and other marginalized stakeholders have a voice in economic and political debates. It would also include support to finance and planning ministries to change decision making processes so that they include broad-based consultations, as well as reforms of the civil service and government processes so that they are more responsive to citizen demands.

Some members of the international community are well equipped to provide support to better governance and institutional development. For example, the United Nations Development Program has a mandate in the area of governance that includes the principles of transparency, voice, and accountability. The Food and Agriculture Organization of the United Nations has a great deal of experience in supporting farming organizations, while the International Labor Organization has traditionally worked with labor unions. UN agencies are viewed as politically neutral and therefore can provide needed support to NGOs, legislatures, and the free press without being accused of political meddling. The International Monetary Fund and the World Bank also have vast experience in supporting institutional development, particularly through reforms of public financial management and civil service reforms. The Japan International Cooperation Agency is already working with the Egyptian government to support inclusive planning. The objective is to enhance the transparency of economic policy-making, and provide greater voice to different stakeholders as they participate in the planning process.

Arab countries in transition are facing huge opportunities, but also huge challenges. The revolutions have broken a wall of fear, and have destroyed the old autocratic social contract. Arab societies are adopting universal values of liberty, dignity, equality and justice. But the transitions are proving to be long and very difficult. The international community could play an important role. Supporting the emergence of new, inclusive economic institutions would be an important contribution to democratization as well as to social justice in the Arab World.

[1] Amin, M. and others (2012), After the Spring: Economic Transitions in the Arab World, Oxford University Press: Oxford.

[2] See Acemoglu, D. and J. Robinson (2012) Why Nations Fail: the Origins of Power, Prosperity and Poverty. Crown Publishers: New York

Authors

]]>
http://www.brookings.edu/research/podcasts/2014/02/bleak-picture-for-childrens-education-in-arab-world?rssid=ghanemh{6AC00965-5B09-458F-866B-C67CBF3EFC21}http://webfeeds.brookings.edu/~/65480605/0/brookingsrss/experts/ghanemh~Podcast-A-Bleak-Picture-for-Childrens-Education-in-the-Arab-WorldPodcast: A Bleak Picture for Children's Education in the Arab World

"More than half of Arab children are not learning," says Senior Fellow Hafez Ghanem in this new podcast about learning in the Arab world. He joined Liesbet Steer, a fellow also with the Center for Universal Education at Brookings, in this discussion about their findings on and solutions for a range of education issues in the region, including number and quality of teachers, accountability, gender, curriculum, and whether Arab world children are learning the skills they need to compete in the 21st century.

Authors

"More than half of Arab children are not learning," says Senior Fellow Hafez Ghanem in this new podcast about learning in the Arab world. He joined Liesbet Steer, a fellow also with the Center for Universal Education at Brookings, in this discussion about their findings on and solutions for a range of education issues in the region, including number and quality of teachers, accountability, gender, curriculum, and whether Arab world children are learning the skills they need to compete in the 21st century.

The approval of a new Constitution in a referendum that took place on January 14-15, 2014 is an important step in implementing the roadmap announced by the current interim authorities in Egypt. The authorities feel that it provides them with greater legitimacy. After all, the participation rate of nearly 39 percent and the 98 percent yes vote are higher than those obtained by the Muslim Brotherhood-backed 2012 Constitution, which had a participation rate of 33 percent and a yes vote of 64 percent.

According to the preliminary assessment of Transparency International “…the political context in the run-up to the referendum impaired conditions to hold a fair and free referendum when compared with international standards.” The assessment pointed out that the interim authorities took some steps that limited freedom of expression, association and assembly, and that the space for civil society to represent the voice of the people has been greatly reduced. The Muslim Brotherhood was declared a terrorist organisation in December 2013. According to Transparency International, government officials as well as public and private media outlets campaigned vigorously for a ‘yes’ vote and did not provide an opportunity for the opposition to express their views. Moreover, activists who called for a ‘no’ vote or for boycotting the referendum faced repression.

In spite of these problems, nearly all foreign observers seem to agree that what is going on in Egypt now is very popular among Egyptians. Why do a majority of Egyptians support the new Constitution and the repression of the Brotherhood? What does this imply for Egypt’s future?

The New Constitution

The new Constitution presents some improvements over the Brotherhood’s Constitution of 2012. First, it curtails the role of Islam in legislation and politics. Sharia is reaffirmed as the principle source of legislation, but a controversial article that gave religious leaders the right to interpret is removed. It also bans political parties based on religion. Second, it provides for equality of sexes. In the Brotherhood’s Constitution, the article referring to traditional Egyptian family was removed. Instead, language was added to ensure equal rights in all civil, political, economic, social and cultural matters, including women’s right to participate in government and be protected from gender-based violence. Third, it includes stronger language on human rights. It provides more latitude for freedom of speech and bans discrimination based on religion or beliefs. It also outlaws torture, and arbitrary forced displacement.

The new Constitution as well as the Brotherhood’s 2012 Constitution are criticised by pro-democracy activists for the special status they provide to the military establishment. Both Constitutions limit parliamentary oversight of the military budget, which will appear in the national budget as one line item. Moreover, both Constitutions allow for the trial of civilians by military courts under certain conditions. The new Constitution also added a provisional article that states that for the next eight years, the Supreme Council of the Armed Forces (which consists of the most senior officers) will have to approve the selection of the Minister of Defence.

Reinforcing Egyptian Nationalism

Discussions with ordinary Egyptians who supported the new Constitution seem to indicate that the content of the Constitution was not the main issue. They voted for the new Constitution in order to express their opposition to the Muslim Brotherhood and their support for the military, particularly for its charismatic leader, General Abdel Fatah Al-Sisi. Ordinary Egyptians who normally are not interested in politics distrust the Brotherhood, as they worry that political Islam is inconsistent with Egyptian nationalism. The Brotherhood’s performance during the year they were in power has apparently confirmed their fears.

Egyptians are very nationalistic as they see themselves as the representatives of one of the world’s most ancient civilisations and nation states. Modern nationalist sentiment in Egypt dates back to the late 19th century when Ahmed Orabi, at the time head of the Egyptian armed forces, revolted in 1879 against the Khedive, who represented the Ottoman Empire. Orabi’s ‘revolution’ failed as the British intervened to support the Khedive. Nevertheless, Orabi continues to be a revered figure in Egypt as the first nationalist leader in modern history. He established two traditions: Egyptian nationalism in conflict with pan-Islamism, which was represented by the Ottoman Empire at that time; and, The Egyptian military as a bastion of nationalist sentiment. Nasser and Sadat, two nationalist presidents of the post-colonial period, had a military background and could be seen as the successors of Orabi. General Al-Sisi comes from the same tradition, and many anti-Brotherhood demonstrations today raise pictures of Nasser next to those of Al-Sisi.

The Muslim Brotherhood could be considered as the antithesis of Egyptian nationalism. It was created in 1928 as a pan-Islamic social and political movement, partly in response to the fall of the Ottoman Empire and the abolition of the Caliphate by Ataturk, which was seen as an important setback by pious Muslims who considered the Caliphate as a necessity in Islam. The Brotherhood views Egypt as just one small part of a large Islamic Caliphate stretching from Spain to Indonesia. A previous general guide of the Brotherhood (Mohamed Akef) generated an outcry when he said in one of his interviews “to hell with Egypt.” He only meant to emphasise the pan-Islamic ambitions of his organisation, but his statement was interpreted by nationalists as “the Brotherhood does not care for Egypt”.

Morsi’s Misrule

The Brotherhood failed to assuage nationalists’ fears during its one year in power. Egyptians were suspicious of the special relations that the Brotherhood built with Turkey, Qatar and Hamas. The Brotherhood was not forceful in denying rumours (not supported by any evidence) that it was selling rights to the Suez Canal to Qatar and was giving special privileges to Hamas in the Sinai. Concomitantly, the Brotherhood attacked important bastions of nationalism such as the judiciary and the cultural/artistic elites. The judges club was in an open conflict with the Brotherhood and claimed that they were undermining the independence of the judiciary. And, Egypt’s influential artists, writers and filmmakers started an open-ended sit-in in front of the Ministry of Culture to protest Islamists’ restrictions on freedom of artistic expression and creativity.

Many Egyptians did not believe in the Brotherhood’s commitment to democracy, especially after they forced through a non-consensual Constitution that was boycotted by secularists, and after they started using some of the same repressive techniques of the Mubarak regime. They feared that the Brotherhood would undermine Egypt as a sovereign nation state and that it would forcibly Islamise Egyptian society.

Moreover, the Brotherhood’s economic management was disastrous. During their rule, growth declined, unemployment and inflation rose, and shortages of key necessities (e.g. fuel) became commonplace, culminating in demonstrations for early presidential elections on June 30, 2013. These are the people who today support general Al-Sisi and the new Constitution.

Roadmap for the Future

But where is Egypt headed now? There are at least three possible scenarios. First, some observers point to the extreme polarisation in Egyptian society between secularists and Islamists and predict a long period of civil strife and instability similar to that experienced by Algeria after the 1991 elections.

Second possibility is growing nationalist sentiment and the popularity of the military/security establishment. They predict that Egypt can become a military dictatorship reminiscent of Chile under General Pinochet. But one can argue that unlike Algeria in the 1990s, Egyptian Islamists are divided between hard-liners, who insist on returning to the status quo ante of July 2, 2013, and pragmatists, who are willing to give the new order a chance; as well as between those who call for peaceful protest and others who espouse violence. Moreover, it can also be argued that unlike Chile of the 1970s, Egyptian youth have learnt to use ‘people power’. They will not tolerate living under a dictatorship, whether religious or military, for an extended period of time.

Therefore, under the third (and more optimistic) scenario, the current transition authorities would complete their roadmap with the election of a new president and Parliament. The new elected leadership would then manage a gradual evolution to full democracy and political and economic inclusion. The process of democratisation may be long, because Egypt has weak democratic institutions and limited experience with democracy. Nevertheless, the authorities will have to take visible and concrete steps towards democracy; otherwise, they may risk yet another Egyptian revolution.

Authors

The approval of a new Constitution in a referendum that took place on January 14-15, 2014 is an important step in implementing the roadmap announced by the current interim authorities in Egypt. The authorities feel that it provides them with greater legitimacy. After all, the participation rate of nearly 39 percent and the 98 percent yes vote are higher than those obtained by the Muslim Brotherhood-backed 2012 Constitution, which had a participation rate of 33 percent and a yes vote of 64 percent.

According to the preliminary assessment of Transparency International “…the political context in the run-up to the referendum impaired conditions to hold a fair and free referendum when compared with international standards.” The assessment pointed out that the interim authorities took some steps that limited freedom of expression, association and assembly, and that the space for civil society to represent the voice of the people has been greatly reduced. The Muslim Brotherhood was declared a terrorist organisation in December 2013. According to Transparency International, government officials as well as public and private media outlets campaigned vigorously for a ‘yes’ vote and did not provide an opportunity for the opposition to express their views. Moreover, activists who called for a ‘no’ vote or for boycotting the referendum faced repression.

In spite of these problems, nearly all foreign observers seem to agree that what is going on in Egypt now is very popular among Egyptians. Why do a majority of Egyptians support the new Constitution and the repression of the Brotherhood? What does this imply for Egypt’s future?

The New Constitution

The new Constitution presents some improvements over the Brotherhood’s Constitution of 2012. First, it curtails the role of Islam in legislation and politics. Sharia is reaffirmed as the principle source of legislation, but a controversial article that gave religious leaders the right to interpret is removed. It also bans political parties based on religion. Second, it provides for equality of sexes. In the Brotherhood’s Constitution, the article referring to traditional Egyptian family was removed. Instead, language was added to ensure equal rights in all civil, political, economic, social and cultural matters, including women’s right to participate in government and be protected from gender-based violence. Third, it includes stronger language on human rights. It provides more latitude for freedom of speech and bans discrimination based on religion or beliefs. It also outlaws torture, and arbitrary forced displacement.

The new Constitution as well as the Brotherhood’s 2012 Constitution are criticised by pro-democracy activists for the special status they provide to the military establishment. Both Constitutions limit parliamentary oversight of the military budget, which will appear in the national budget as one line item. Moreover, both Constitutions allow for the trial of civilians by military courts under certain conditions. The new Constitution also added a provisional article that states that for the next eight years, the Supreme Council of the Armed Forces (which consists of the most senior officers) will have to approve the selection of the Minister of Defence.

Reinforcing Egyptian Nationalism

Discussions with ordinary Egyptians who supported the new Constitution seem to indicate that the content of the Constitution was not the main issue. They voted for the new Constitution in order to express their opposition to the Muslim Brotherhood and their support for the military, particularly for its charismatic leader, General Abdel Fatah Al-Sisi. Ordinary Egyptians who normally are not interested in politics distrust the Brotherhood, as they worry that political Islam is inconsistent with Egyptian nationalism. The Brotherhood’s performance during the year they were in power has apparently confirmed their fears.

Egyptians are very nationalistic as they see themselves as the representatives of one of the world’s most ancient civilisations and nation states. Modern nationalist sentiment in Egypt dates back to the late 19th century when Ahmed Orabi, at the time head of the Egyptian armed forces, revolted in 1879 against the Khedive, who represented the Ottoman Empire. Orabi’s ‘revolution’ failed as the British intervened to support the Khedive. Nevertheless, Orabi continues to be a revered figure in Egypt as the first nationalist leader in modern history. He established two traditions: Egyptian nationalism in conflict with pan-Islamism, which was represented by the Ottoman Empire at that time; and, The Egyptian military as a bastion of nationalist sentiment. Nasser and Sadat, two nationalist presidents of the post-colonial period, had a military background and could be seen as the successors of Orabi. General Al-Sisi comes from the same tradition, and many anti-Brotherhood demonstrations today raise pictures of Nasser next to those of Al-Sisi.

The Muslim Brotherhood could be considered as the antithesis of Egyptian nationalism. It was created in 1928 as a pan-Islamic social and political movement, partly in response to the fall of the Ottoman Empire and the abolition of the Caliphate by Ataturk, which was seen as an important setback by pious Muslims who considered the Caliphate as a necessity in Islam. The Brotherhood views Egypt as just one small part of a large Islamic Caliphate stretching from Spain to Indonesia. A previous general guide of the Brotherhood (Mohamed Akef) generated an outcry when he said in one of his interviews “to hell with Egypt.” He only meant to emphasise the pan-Islamic ambitions of his organisation, but his statement was interpreted by nationalists as “the Brotherhood does not care for Egypt”.

Morsi’s Misrule

The Brotherhood failed to assuage nationalists’ fears during its one year in power. Egyptians were suspicious of the special relations that the Brotherhood built with Turkey, Qatar and Hamas. The Brotherhood was not forceful in denying rumours (not supported by any evidence) that it was selling rights to the Suez Canal to Qatar and was giving special privileges to Hamas in the Sinai. Concomitantly, the Brotherhood attacked important bastions of nationalism such as the judiciary and the cultural/artistic elites. The judges club was in an open conflict with the Brotherhood and claimed that they were undermining the independence of the judiciary. And, Egypt’s influential artists, writers and filmmakers started an open-ended sit-in in front of the Ministry of Culture to protest Islamists’ restrictions on freedom of artistic expression and creativity.

Many Egyptians did not believe in the Brotherhood’s commitment to democracy, especially after they forced through a non-consensual Constitution that was boycotted by secularists, and after they started using some of the same repressive techniques of the Mubarak regime. They feared that the Brotherhood would undermine Egypt as a sovereign nation state and that it would forcibly Islamise Egyptian society.

Moreover, the Brotherhood’s economic management was disastrous. During their rule, growth declined, unemployment and inflation rose, and shortages of key necessities (e.g. fuel) became commonplace, culminating in demonstrations for early presidential elections on June 30, 2013. These are the people who today support general Al-Sisi and the new Constitution.

Roadmap for the Future

But where is Egypt headed now? There are at least three possible scenarios. First, some observers point to the extreme polarisation in Egyptian society between secularists and Islamists and predict a long period of civil strife and instability similar to that experienced by Algeria after the 1991 elections.

Second possibility is growing nationalist sentiment and the popularity of the military/security establishment. They predict that Egypt can become a military dictatorship reminiscent of Chile under General Pinochet. But one can argue that unlike Algeria in the 1990s, Egyptian Islamists are divided between hard-liners, who insist on returning to the status quo ante of July 2, 2013, and pragmatists, who are willing to give the new order a chance; as well as between those who call for peaceful protest and others who espouse violence. Moreover, it can also be argued that unlike Chile of the 1970s, Egyptian youth have learnt to use ‘people power’. They will not tolerate living under a dictatorship, whether religious or military, for an extended period of time.

Therefore, under the third (and more optimistic) scenario, the current transition authorities would complete their roadmap with the election of a new president and Parliament. The new elected leadership would then manage a gradual evolution to full democracy and political and economic inclusion. The process of democratisation may be long, because Egypt has weak democratic institutions and limited experience with democracy. Nevertheless, the authorities will have to take visible and concrete steps towards democracy; otherwise, they may risk yet another Egyptian revolution.

Event Information

The Arab Spring was about political and economic inclusiveness. Three years later, the outcomes of the revolutions have been mixed. In Morocco, the king responded by revising the constitution, carrying out free parliamentary elections and letting the winning party form a new government. In Tunisia, political parties debated on a new constitution for nearly three years and now a neutral government has been appointed to supervise elections. Meanwhile, in Egypt, the struggle between Islamists and secular-nationalists has turned violent, weakening economic growth and increasing unemployment.

On February 11, Global Economy and Development at Brookings hosted a discussion on inclusive growth in the post-Arab Spring countries. The discussion was based on a series of papers on the political economy of the Arab transitions and efforts to foster inclusive growth in the region. The papers were authored by Brookings scholars and their colleagues from the Japan International Cooperation Agency (JICA) and presented case studies from Egypt, Jordan and Tunisia.

Event Information

The Arab Spring was about political and economic inclusiveness. Three years later, the outcomes of the revolutions have been mixed. In Morocco, the king responded by revising the constitution, carrying out free parliamentary elections and letting the winning party form a new government. In Tunisia, political parties debated on a new constitution for nearly three years and now a neutral government has been appointed to supervise elections. Meanwhile, in Egypt, the struggle between Islamists and secular-nationalists has turned violent, weakening economic growth and increasing unemployment.

On February 11, Global Economy and Development at Brookings hosted a discussion on inclusive growth in the post-Arab Spring countries. The discussion was based on a series of papers on the political economy of the Arab transitions and efforts to foster inclusive growth in the region. The papers were authored by Brookings scholars and their colleagues from the Japan International Cooperation Agency (JICA) and presented case studies from Egypt, Jordan and Tunisia.

Audio

Transcript

Event Materials

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http://www.brookings.edu/research/papers/2014/01/29-regional-rural-development-growth-egypt-ghanem?rssid=ghanemh{69419F8F-46CF-474B-8FF2-126E6D9B4F1E}http://webfeeds.brookings.edu/~/65480608/0/brookingsrss/experts/ghanemh~Improving-Regional-and-Rural-Development-for-Inclusive-Growth-in-EgyptImproving Regional and Rural Development for Inclusive Growth in Egypt

This paper examines how economic growth in Egypt can be made more inclusive through a focus on rural development and reducing regional disparities. Nearly all of the extremely poor in Egypt live in rural areas and 83 percent of them live in Upper Egypt. The youth in those rural areas feel particularly excluded.

The paper proposes a three-pronged strategy for dealing with regional inequalities and reducing the rural-urban divide. First, there is a need to move to a more transparent and inclusive system for economic planning and the allocation of public expenditures. The poor and lagging regions have been receiving less than their fair share of public funds, and this would only change if the whole decision-making process for budget allocation is revised so that ordinary citizens, particularly the poor, have a greater say in budgetary allocations. Second, the approach to social protection and social safety nets needs to be modernized and made more sensitive to the needs of rural-dwellers. The current system that relies mainly on subsidized prices, especially for energy, does not properly target the rural poor. It is argued here that the rural poor would be better served by a system based on direct cash transfers similar to the systems used in Brazil and Mexico. Third, since most of the rural poor depend directly or indirectly on agriculture for their livelihoods, agriculture development and modernization focusing on support to small-holder farmers would be important for rural poverty reduction.

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Authors

This paper examines how economic growth in Egypt can be made more inclusive through a focus on rural development and reducing regional disparities. Nearly all of the extremely poor in Egypt live in rural areas and 83 percent of them live in Upper Egypt. The youth in those rural areas feel particularly excluded.

The paper proposes a three-pronged strategy for dealing with regional inequalities and reducing the rural-urban divide. First, there is a need to move to a more transparent and inclusive system for economic planning and the allocation of public expenditures. The poor and lagging regions have been receiving less than their fair share of public funds, and this would only change if the whole decision-making process for budget allocation is revised so that ordinary citizens, particularly the poor, have a greater say in budgetary allocations. Second, the approach to social protection and social safety nets needs to be modernized and made more sensitive to the needs of rural-dwellers. The current system that relies mainly on subsidized prices, especially for energy, does not properly target the rural poor. It is argued here that the rural poor would be better served by a system based on direct cash transfers similar to the systems used in Brazil and Mexico. Third, since most of the rural poor depend directly or indirectly on agriculture for their livelihoods, agriculture development and modernization focusing on support to small-holder farmers would be important for rural poverty reduction.

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Authors

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http://www.brookings.edu/research/papers/2014/01/egypt-transition-economy-ghanem?rssid=ghanemh{762B7D6D-3A3E-424B-86CE-1EF394D2A09E}http://webfeeds.brookings.edu/~/65480609/0/brookingsrss/experts/ghanemh~Egypts-Difficult-Transition-Why-the-International-Community-Must-Stay-Economically-EngagedEgypt's Difficult Transition: Why the International Community Must Stay Economically Engaged

This paper presents a political-economy analysis of the Egyptian transition experience from the fall of President Hosni Mubarak in February 2011 until the end of 2013, and considers options for the future. Establishing a stable democracy in a country with weak institutions and no democratic culture will take years or even decades. With the benefit of hindsight, most observers were too optimistic in 2011 when they predicted that the “Arab Spring” would quickly lead to democracy. They are probably too pessimistic today when they declare the failure of Egypt’s democratic transition. The millions of Egyptians who swarmed into Tahrir Square in January 2011 demanding that Mubarak step down, and then again in June 2013 asking for the overthrow of President Mohammed Morsi, have learned how to use “people power.” A wall of fear has been broken, and it would be difficult for another autocratic regime to succeed in ruling Egypt for an extended period of time.

The political struggle taking place in Egypt today has roots that go back to the late 19th century. For about a century Islamists and secular-nationalists have been fighting over Egypt’s identity and future. Their differences could sometimes seem irreconcilable. It is not clear how a vision of Egypt as a small part of a large Islamic community can coexist with a vision of Egypt as one of the oldest civilizations and nation-states in the world. Similarly, it is not clear how Islamists’ interpretation of Shariah can be made consistent with an open and democratic society.

The escalation of this political struggle and the increasing violence was caused by a mismanagement of the transition. Both the military leadership that took power after the fall of Mubarak and the Muslim Brotherhood that ruled the country from mid-2012 to mid-2013 must bear part of the blame. The military’s decision to hold elections before agreement on a constitution and the “rules of the game” ensured a crushing Brotherhood victory at the polls and the exclusion of other political and social groups. And, the Brotherhood’s failure to compromise with secular forces and reach consensus on important issues of national identity, together with their inability to tackle economic problems, led to the popular uprising against them in June 2013.

Western aid needs to be used strategically and be combined with knowledge-sharing and technology-transfer to support democratization and help achieve the Egyptian people’s dream of “bread, liberty, social justice and human dignity.”

The international community needs to take a patient and long-term view of developments in Egypt. Western interests and values would probably be best served by maintaining its engagement with Egypt and its economic assistance. Western aid is small relative to the size of the Egyptian economy and relative to the massive financial flows from the Persian Gulf oil producers. Therefore, western aid needs to be used strategically and be combined with knowledge-sharing and technology-transfer to support democratization and help achieve the Egyptian people’s dream of “bread, liberty, social justice and human dignity.”

This paper does not argue for giving carte blanche to the current leadership in Cairo. But it argues for accompanying them as long as they implement their roadmap for moving toward democracy. By remaining engaged with Egypt the international community can continue its high-level policy dialogue in support of democratic reforms, and it can modulate its assistance to reflect progress on the road to democracy. This paper argues that the immediate objective of donor assistance should be to help achieve inclusive growth and social justice, which are necessary for democratic development. Areas where international community interventions could be particularly useful are: (1) building inclusive economic institutions, (2) supporting small and medium businesses, and (3) fighting rural poverty through agricultural projects and strengthening the social safety net system to protect small and landless farmers.

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Authors

This paper presents a political-economy analysis of the Egyptian transition experience from the fall of President Hosni Mubarak in February 2011 until the end of 2013, and considers options for the future. Establishing a stable democracy in a country with weak institutions and no democratic culture will take years or even decades. With the benefit of hindsight, most observers were too optimistic in 2011 when they predicted that the “Arab Spring” would quickly lead to democracy. They are probably too pessimistic today when they declare the failure of Egypt’s democratic transition. The millions of Egyptians who swarmed into Tahrir Square in January 2011 demanding that Mubarak step down, and then again in June 2013 asking for the overthrow of President Mohammed Morsi, have learned how to use “people power.” A wall of fear has been broken, and it would be difficult for another autocratic regime to succeed in ruling Egypt for an extended period of time.

The political struggle taking place in Egypt today has roots that go back to the late 19th century. For about a century Islamists and secular-nationalists have been fighting over Egypt’s identity and future. Their differences could sometimes seem irreconcilable. It is not clear how a vision of Egypt as a small part of a large Islamic community can coexist with a vision of Egypt as one of the oldest civilizations and nation-states in the world. Similarly, it is not clear how Islamists’ interpretation of Shariah can be made consistent with an open and democratic society.

The escalation of this political struggle and the increasing violence was caused by a mismanagement of the transition. Both the military leadership that took power after the fall of Mubarak and the Muslim Brotherhood that ruled the country from mid-2012 to mid-2013 must bear part of the blame. The military’s decision to hold elections before agreement on a constitution and the “rules of the game” ensured a crushing Brotherhood victory at the polls and the exclusion of other political and social groups. And, the Brotherhood’s failure to compromise with secular forces and reach consensus on important issues of national identity, together with their inability to tackle economic problems, led to the popular uprising against them in June 2013.

Western aid needs to be used strategically and be combined with knowledge-sharing and technology-transfer to support democratization and help achieve the Egyptian people’s dream of “bread, liberty, social justice and human dignity.”

The international community needs to take a patient and long-term view of developments in Egypt. Western interests and values would probably be best served by maintaining its engagement with Egypt and its economic assistance. Western aid is small relative to the size of the Egyptian economy and relative to the massive financial flows from the Persian Gulf oil producers. Therefore, western aid needs to be used strategically and be combined with knowledge-sharing and technology-transfer to support democratization and help achieve the Egyptian people’s dream of “bread, liberty, social justice and human dignity.”

This paper does not argue for giving carte blanche to the current leadership in Cairo. But it argues for accompanying them as long as they implement their roadmap for moving toward democracy. By remaining engaged with Egypt the international community can continue its high-level policy dialogue in support of democratic reforms, and it can modulate its assistance to reflect progress on the road to democracy. This paper argues that the immediate objective of donor assistance should be to help achieve inclusive growth and social justice, which are necessary for democratic development. Areas where international community interventions could be particularly useful are: (1) building inclusive economic institutions, (2) supporting small and medium businesses, and (3) fighting rural poverty through agricultural projects and strengthening the social safety net system to protect small and landless farmers.

Editor's Note: In a new paper, Brookings experts and colleagues examine education in the Arab world, including key issues, youth employment and improving learning. Explore the related interactive »

Recent events continue to underline the fragility of the
Arab region. Civil war rages in Syria, refugees surge
across borders and the lasting effects of the Arab
Spring are uncertain. What is certain, however, is that
it is essential to give attention to the welfare of the region’s
young people and to economic health in order
to build the foundations for lasting political stability
and, in many countries, for a transition to democracy.
Education is central to this effort. In particular, the ability
of educational systems to help the region’s children
and youth develop the competencies and skills that will
serve them well for their future lives and livelihoods.

Economic conditions in a number of countries have
deteriorated recently, contributing to a sense of disillusionment
and frustration among the population and especially
youth. In Egypt and Tunisia, for example, citizen
attitude surveys indicate that 83 percent of Tunisians
and more than 70 percent of Egyptians are unhappy
with current economic conditions (Pew Research
Center 2012). Youth unemployment is a grave concern.
Official unemployment figures tend to underestimate the
magnitude of the problem, and especially the problems
related to youth exclusion and women’s access to jobs.

In Tunisia, for instance, youth make up 33 percent of
the labor force but account for 75 percent of the unemployed.
Most governments have so far concentrated on
stimulating labor’s demand side (e.g., through investment
climate policies) but have been paying less attention
to the supply side (e.g., ensuring that youth have
the necessary skills to compete in the labor market).

The purpose of this report is to shine a spotlight on
education in the Arab world at a time when most public
attention is focused elsewhere, and thereby to open a
dialogue about this key issue. It is crucial now, more
than ever, to provide support for the ongoing efforts
of Arab educationalists—the many actors and innovators
who are working day by day to provide education
to the region’s young people. Progressive and smart
investments in education made today, including those
focused on children affected by conflict, will reap large
benefits in the future.

Increasingly, global actors are focusing both on who has
access to education but also, of particular importance,
on the types of skills, competencies and values that
young people acquire through their educational experience
(United Nations 2013). New data show, globally,
that 250 million children are not able to read, write or count well, even though many of them spent four years in school, and that 200 million youth do not have the skills needed for their future lives (UNESCO 2012).

But what about the young people in the Arab world? Our analysis provides a regional overview of children’s and youth’s ability to access, stay in and learn in school. According to the latest data available at the primary and lower secondary school levels, we find that

Getting into School: There are 3.1 million fewer children out of school since 2002 in the Arab region, but 8.5 million children remain excluded. Many of them are girls from poor, rural communities often living in regions affected by conflict.

Staying in School: More children are finishing primary school than ever before, yet in many countries more youth are dropping out of lower secondary school than a decade ago.

Learning Foundational Skills: Using available learning assessments in 13 Arab countries, the average proportion of children not learning while in school stands at 56 percent at the primary level and 48 percent at the lower secondary level.

Regional Learning Crisis with Wide Variation Across Countries: Learning outcomes vary significantly across countries in the region for which we have data but are particularly worrying in Yemen, Morocco, Kuwait and Tunisia where between two-thirds and ninety percent of primary-age students are failing to learn. At the lower secondary level, over 60 percent of students are not learning in Morocco and Oman. The learning performance of children in Arab countries is also below expectations, given the countries’ income levels.

Girls versus Boys: There is a mixed, or “boomerang,” dynamic for girls. While girls are less likely to enter school than boys, they are more likely to make the transition from primary to secondary education, and they tend to outperform boys in terms of learning. However, despite significant investment and better performance in education, young adult women are much less likely to be employed than are men.

Education Data Gaps: There are multiple gaps in education data in Arab countries—only a small handful of countries systematically measure literacy and numeracy at both the primary and lower secondary levels.

Education for a Productive Life—Youth Employment Link: The lack of appropriate foundational skills has likely contributed to the employment crisis in the region, but the dynamics between the education system and the labor market, including the different reasons for boys’ and girls’ participation in education and labor markets, need to be better understood.

The findings in this report have important implications not only for families and education systems but also for those policymakers focused on how the region can better address important economic issues, including youth unemployment. After reviewing the education outcomes in depth, we discuss their implications for youth employment in detail. In conclusion, we hope these findings lead to further dialogue among actors in the region on what actions could be most fruitful for improving young people’s learning.

Authors

Editor's Note: In a new paper, Brookings experts and colleagues examine education in the Arab world, including key issues, youth employment and improving learning. Explore the related interactive »

Recent events continue to underline the fragility of the
Arab region. Civil war rages in Syria, refugees surge
across borders and the lasting effects of the Arab
Spring are uncertain. What is certain, however, is that
it is essential to give attention to the welfare of the region’s
young people and to economic health in order
to build the foundations for lasting political stability
and, in many countries, for a transition to democracy.
Education is central to this effort. In particular, the ability
of educational systems to help the region’s children
and youth develop the competencies and skills that will
serve them well for their future lives and livelihoods.

Economic conditions in a number of countries have
deteriorated recently, contributing to a sense of disillusionment
and frustration among the population and especially
youth. In Egypt and Tunisia, for example, citizen
attitude surveys indicate that 83 percent of Tunisians
and more than 70 percent of Egyptians are unhappy
with current economic conditions (Pew Research
Center 2012). Youth unemployment is a grave concern.
Official unemployment figures tend to underestimate the
magnitude of the problem, and especially the problems
related to youth exclusion and women’s access to jobs.

In Tunisia, for instance, youth make up 33 percent of
the labor force but account for 75 percent of the unemployed.
Most governments have so far concentrated on
stimulating labor’s demand side (e.g., through investment
climate policies) but have been paying less attention
to the supply side (e.g., ensuring that youth have
the necessary skills to compete in the labor market).

The purpose of this report is to shine a spotlight on
education in the Arab world at a time when most public
attention is focused elsewhere, and thereby to open a
dialogue about this key issue. It is crucial now, more
than ever, to provide support for the ongoing efforts
of Arab educationalists—the many actors and innovators
who are working day by day to provide education
to the region’s young people. Progressive and smart
investments in education made today, including those
focused on children affected by conflict, will reap large
benefits in the future.

Increasingly, global actors are focusing both on who has
access to education but also, of particular importance,
on the types of skills, competencies and values that
young people acquire through their educational experience
(United Nations 2013). New data show, globally,
that 250 million children are not able to read, write or count well, even though many of them spent four years in school, and that 200 million youth do not have the skills needed for their future lives (UNESCO 2012).

But what about the young people in the Arab world? Our analysis provides a regional overview of children’s and youth’s ability to access, stay in and learn in school. According to the latest data available at the primary and lower secondary school levels, we find that

Getting into School: There are 3.1 million fewer children out of school since 2002 in the Arab region, but 8.5 million children remain excluded. Many of them are girls from poor, rural communities often living in regions affected by conflict.

Staying in School: More children are finishing primary school than ever before, yet in many countries more youth are dropping out of lower secondary school than a decade ago.

Learning Foundational Skills: Using available learning assessments in 13 Arab countries, the average proportion of children not learning while in school stands at 56 percent at the primary level and 48 percent at the lower secondary level.

Regional Learning Crisis with Wide Variation Across Countries: Learning outcomes vary significantly across countries in the region for which we have data but are particularly worrying in Yemen, Morocco, Kuwait and Tunisia where between two-thirds and ninety percent of primary-age students are failing to learn. At the lower secondary level, over 60 percent of students are not learning in Morocco and Oman. The learning performance of children in Arab countries is also below expectations, given the countries’ income levels.

Girls versus Boys: There is a mixed, or “boomerang,” dynamic for girls. While girls are less likely to enter school than boys, they are more likely to make the transition from primary to secondary education, and they tend to outperform boys in terms of learning. However, despite significant investment and better performance in education, young adult women are much less likely to be employed than are men.

Education Data Gaps: There are multiple gaps in education data in Arab countries—only a small handful of countries systematically measure literacy and numeracy at both the primary and lower secondary levels.

Education for a Productive Life—Youth Employment Link: The lack of appropriate foundational skills has likely contributed to the employment crisis in the region, but the dynamics between the education system and the labor market, including the different reasons for boys’ and girls’ participation in education and labor markets, need to be better understood.

The findings in this report have important implications not only for families and education systems but also for those policymakers focused on how the region can better address important economic issues, including youth unemployment. After reviewing the education outcomes in depth, we discuss their implications for youth employment in detail. In conclusion, we hope these findings lead to further dialogue among actors in the region on what actions could be most fruitful for improving young people’s learning.

Economic recovery grounded in inclusive economic growth should be a top priority for the new leadership in Tunisia and Egypt. This paper analyzes the actions governments and donors should take to achieve macro-financial stabilization, increase economic opportunities for youth and disadvantaged groups, and improve good governance in support of inclusive and sustainable growth.

Among the Key Findings:

Successful implementation of economic reform requires broad national consultations and some degree of political consensus, which governments could work towards by publicizing economic programs, reaching out to opposition groups, and providing an appropriate legal framework for NGO action.

Security sector reforms should be given high priority, as security and political stability are important prerequisites for resuming economic growth.

Macro-stabilization programs must be accompanied by social mitigation measures and actions that lay the ground for inclusive growth, including: strong and targeted social safety net programs; better corruption control; and programs to develop small and medium enterprises.

Authors

Economic recovery grounded in inclusive economic growth should be a top priority for the new leadership in Tunisia and Egypt. This paper analyzes the actions governments and donors should take to achieve macro-financial stabilization, increase economic opportunities for youth and disadvantaged groups, and improve good governance in support of inclusive and sustainable growth.

Among the Key Findings:

Successful implementation of economic reform requires broad national consultations and some degree of political consensus, which governments could work towards by publicizing economic programs, reaching out to opposition groups, and providing an appropriate legal framework for NGO action.

Security sector reforms should be given high priority, as security and political stability are important prerequisites for resuming economic growth.

Macro-stabilization programs must be accompanied by social mitigation measures and actions that lay the ground for inclusive growth, including: strong and targeted social safety net programs; better corruption control; and programs to develop small and medium enterprises.

The dream for democracy in Egypt is not dead, despite bloody clashes on the streets of Cairo. The millions of Egyptians who swarmed into Tahrir Square in January 2011 demanding that Mubarak step down, and then again in June 2013 asking for the overthrow of Morsi, have learned how to use “people power.” Therefore, it would be difficult for another autocratic regime (whether military or Islamist) to succeed in ruling Egypt for an extended period of time. Egyptians, especially youth, will not stand for it. Their goals of economic opportunity, political freedom, social justice and human dignity cannot be achieved under autocracy.

It is too early to declare the defeat of Egypt’s democratic movement. The youth of Tahrir Square are still there and they represent the majority of Egyptians. Opinion polls indicate that 67 percent of Egyptians feel that democracy is the preferred form of government.

But the violence between pro- and anti- Muslim Brotherhood forces that is threatening to unravel the very fabric of Egyptian society must stop. Of course, ending violence is one of those things that are much easier said than done. Feelings are running high on both sides. Furthermore, with every new drop of blood that is spilled, anger and frustration are rising. Each camp is accusing the other of crimes and atrocities. Judging by the number of victims among the Muslim Brotherhood, as well as among the security forces, it would appear that both sides’ accusations may have some truth in them.

Calls for revenge can be heard all over Egypt. The side that will win this conflict will almost surely seek “justice for the martyrs.” Operationally, this means that large numbers of people on the losing side will end up in jail and, as of now, the Muslim Brotherhood is the losing side.

Brotherhood supporters are highly committed and seem willing to die in defense of what they consider to be democratic legitimacy. They are probably capable of continuing to organize protests in different places across the country for a long time.

However, it is unlikely that either side will achieve a lasting victory. The army and police are well-armed and seem determined to use their weapons against a group that they consider to be threatening Egypt’s national interests and security. They are also supported by huge segments of the population, probably the majority. However, the Muslim Brotherhood is well organized and also enjoys widespread support. Brotherhood supporters are highly committed and seem willing to die in defense of what they consider to be democratic legitimacy. They are probably capable of continuing to organize protests in different places across the country for a long time.

The minimum level of consensus that is needed to put in place new democratic institutions would be hard to achieve under current circumstances. The interim government will find it difficult to properly implement its roadmap, which includes revising the constitution and organizing free and fair parliamentary and presidential elections in less than one year. It first needs to take steps to reduce tensions and the polarization of Egyptian society. Otherwise, it will end up with a non-inclusive process, very similar to the one that ultimately caused Morsi’s downfall.

Creating a Truth and Reconciliation Commission (modeled on the one set up by President Mandela and Bishop Tutu after the fall of apartheid in South Africa) could be one way of easing tensions. The objective of this commission would be to discover and reveal crimes perpetrated by all sides over the last two years and, by doing so, help achieve national reconciliation. More than 20 countries all around the world have followed the South African example and set up such commissions to deal with crises and transitional situations.

Setting up a Truth and Reconciliation Commission would raise many difficult questions. These include questions regarding the membership of the commission, as well as its relationship with the criminal justice system. However, Egypt has not yet reached the stage where such questions are even relevant.

The real question is whether Egyptian society wants national reconciliation. Today, the answer appears to be negative. Opponents and supporters of the Muslim Brotherhood continue demonizing one another, and violence between them is becoming commonplace. Neither side has shown sufficient willingness to compromise. But inevitably, some day (hopefully soon) they will come to the realization that they need to find a way of living together in a democratic country. When that day comes, Egypt may need a Truth and Reconciliation Commission.

Authors

The dream for democracy in Egypt is not dead, despite bloody clashes on the streets of Cairo. The millions of Egyptians who swarmed into Tahrir Square in January 2011 demanding that Mubarak step down, and then again in June 2013 asking for the overthrow of Morsi, have learned how to use “people power.” Therefore, it would be difficult for another autocratic regime (whether military or Islamist) to succeed in ruling Egypt for an extended period of time. Egyptians, especially youth, will not stand for it. Their goals of economic opportunity, political freedom, social justice and human dignity cannot be achieved under autocracy.

It is too early to declare the defeat of Egypt’s democratic movement. The youth of Tahrir Square are still there and they represent the majority of Egyptians. Opinion polls indicate that 67 percent of Egyptians feel that democracy is the preferred form of government.

But the violence between pro- and anti- Muslim Brotherhood forces that is threatening to unravel the very fabric of Egyptian society must stop. Of course, ending violence is one of those things that are much easier said than done. Feelings are running high on both sides. Furthermore, with every new drop of blood that is spilled, anger and frustration are rising. Each camp is accusing the other of crimes and atrocities. Judging by the number of victims among the Muslim Brotherhood, as well as among the security forces, it would appear that both sides’ accusations may have some truth in them.

Calls for revenge can be heard all over Egypt. The side that will win this conflict will almost surely seek “justice for the martyrs.” Operationally, this means that large numbers of people on the losing side will end up in jail and, as of now, the Muslim Brotherhood is the losing side.

Brotherhood supporters are highly committed and seem willing to die in defense of what they consider to be democratic legitimacy. They are probably capable of continuing to organize protests in different places across the country for a long time.

However, it is unlikely that either side will achieve a lasting victory. The army and police are well-armed and seem determined to use their weapons against a group that they consider to be threatening Egypt’s national interests and security. They are also supported by huge segments of the population, probably the majority. However, the Muslim Brotherhood is well organized and also enjoys widespread support. Brotherhood supporters are highly committed and seem willing to die in defense of what they consider to be democratic legitimacy. They are probably capable of continuing to organize protests in different places across the country for a long time.

The minimum level of consensus that is needed to put in place new democratic institutions would be hard to achieve under current circumstances. The interim government will find it difficult to properly implement its roadmap, which includes revising the constitution and organizing free and fair parliamentary and presidential elections in less than one year. It first needs to take steps to reduce tensions and the polarization of Egyptian society. Otherwise, it will end up with a non-inclusive process, very similar to the one that ultimately caused Morsi’s downfall.

Creating a Truth and Reconciliation Commission (modeled on the one set up by President Mandela and Bishop Tutu after the fall of apartheid in South Africa) could be one way of easing tensions. The objective of this commission would be to discover and reveal crimes perpetrated by all sides over the last two years and, by doing so, help achieve national reconciliation. More than 20 countries all around the world have followed the South African example and set up such commissions to deal with crises and transitional situations.

Setting up a Truth and Reconciliation Commission would raise many difficult questions. These include questions regarding the membership of the commission, as well as its relationship with the criminal justice system. However, Egypt has not yet reached the stage where such questions are even relevant.

The real question is whether Egyptian society wants national reconciliation. Today, the answer appears to be negative. Opponents and supporters of the Muslim Brotherhood continue demonizing one another, and violence between them is becoming commonplace. Neither side has shown sufficient willingness to compromise. But inevitably, some day (hopefully soon) they will come to the realization that they need to find a way of living together in a democratic country. When that day comes, Egypt may need a Truth and Reconciliation Commission.

Tunisia has always been considered to be the “Arab Spring” country most likely to succeed in its democratic transition. But recently, there have been worrisome signs. An opposition leader was murdered today, which is bound to lead to widespread protests. A group of Tunisians has started a Tamarod, or rebel, movement. They are emulating the Egyptian Tamarod, which collected 22 million signatures in a petition for early presidential elections and organized the massive demonstrations against President Morsi which ultimately triggered his overthrow by the military. The Tunisian Tamarod’s stated objective is to withdraw confidence from the elected constituent assembly (whose mandate was supposed to end in October 2012) and from the government. The Islamist Ennahda Party has the most seats in the assembly and leads the Tunisian government.

There are two important similarities between Tunisia and Egypt. First, Tunisian society is polarized between secularists and Islamists. Tunisian secularists are even more vocal than their Egyptian counterparts. They are influenced by the French concept of laïcité, which implies a stronger separation between church and state than in the Anglo-Saxon tradition. They complain about the “Islamization” of the civil service and argue that Ennahda’s long-term objective is to turn Tunisia into an Islamic state.

Second, the Islamist-led government in Tunisia has so far failed to deliver on the revolution’s economic demands. About 78 percent of Tunisians are dissatisfied with the general direction that their country is taking, 83 percent feel that current economic conditions are bad, and 42 percent believe that the country was better off under the former dictator. Discontent in Tunisia appears to be even greater than in Egypt (see table 1). On a more positive note, the Tunisian government has recently reached an agreement with the International Monetary Fund, and some 75 percent of Tunisians expect their economy to improve.

Table 1:
Responses to questions about economic conditions (percent of the population)

Tunisia

Egypt

Dissatisfied with the direction
the country is taking

78 percent

62 percent

Think that the current economic
conditions are bad

83 percent

76 percent

Feel that the country is worse off
after the departure of dictator

42 percent

30 percent

Source: Pew Research Center’s Global Attitudes Project. Tunisian data is from July 2012 and Egyptian data is from May 2013.

About 81 percent of Tunisians feel that corruption has increased either a lot or a little after the revolution.

Tunisians also believe that their government has failed to control corruption, which was a major revolutionary demand. About 81 percent of Tunisians feel that corruption has increased either a lot or a little after the revolution. This is higher than in Egypt, where 64 percent of those surveyed felt the same way (see table 2).

Table 2:
Perceptions about changes in corruption over the last two years (percent of population)

Tunisia

Egypt

Feel corruption has increased a lot

61 percent

37 percent

Feel corruption has increased a little

20 percent

27 percent

Feel corruption has stayed the same

14 percent

21 percent

Feel corruption has decreased a little

5 percent

11 percent

Feel corruption has decreased a lot

2 percent

5 percent

Source: Transparency International, Global Corruption Barometer, 2013

On the other hand, there are three major differences between Tunisia and Egypt. First, unlike the Muslim Brothers, Ennahda has not been governing alone. It is leading a coalition with two secular parties and therefore may not carry all the blame for negative economic results. The Egyptian secularist claim that the Muslim Brotherhood monopolized power and that President Morsi was an autocrat could not be easily transferred to Tunisia.

Second, the process of constitution writing in Tunisia has been long and has included a real debate between Islamist and secular members of the constituent assembly; both sides have been making concessions and accepting compromises. This is different from the Egyptian case, wherein the constitution was written in a hurry by an Islamist-dominated commission and approved through a referendum in which the turnout was less than 33 percent. Tunisians are eager for this process to conclude. Therefore, it is hard to see them supporting the creation of another assembly or commission which would start writing a new constitution from scratch (as is demanded by Tamarod).

Third, and perhaps most importantly, the Tunisian military is different than the Egyptian one, in that it does not have a history of political involvement. It is unlikely that the military in Tunisia will side with Tamarod and force the overthrow of the constituent assembly and the government.

The chances of Tamarod succeeding in turning Tunisia into another Egypt appear slim, at least for the time being. Things could change if the constituent assembly continues to delay agreement on a new constitution and a road map for elections and a stable government. This job was supposed to be completed some nine months ago, and Tunisians are starting to show signs of impatience.

Authors

Tunisia has always been considered to be the “Arab Spring” country most likely to succeed in its democratic transition. But recently, there have been worrisome signs. An opposition leader was murdered today, which is bound to lead to widespread protests. A group of Tunisians has started a Tamarod, or rebel, movement. They are emulating the Egyptian Tamarod, which collected 22 million signatures in a petition for early presidential elections and organized the massive demonstrations against President Morsi which ultimately triggered his overthrow by the military. The Tunisian Tamarod’s stated objective is to withdraw confidence from the elected constituent assembly (whose mandate was supposed to end in October 2012) and from the government. The Islamist Ennahda Party has the most seats in the assembly and leads the Tunisian government.

There are two important similarities between Tunisia and Egypt. First, Tunisian society is polarized between secularists and Islamists. Tunisian secularists are even more vocal than their Egyptian counterparts. They are influenced by the French concept of laïcité, which implies a stronger separation between church and state than in the Anglo-Saxon tradition. They complain about the “Islamization” of the civil service and argue that Ennahda’s long-term objective is to turn Tunisia into an Islamic state.

Second, the Islamist-led government in Tunisia has so far failed to deliver on the revolution’s economic demands. About 78 percent of Tunisians are dissatisfied with the general direction that their country is taking, 83 percent feel that current economic conditions are bad, and 42 percent believe that the country was better off under the former dictator. Discontent in Tunisia appears to be even greater than in Egypt (see table 1). On a more positive note, the Tunisian government has recently reached an agreement with the International Monetary Fund, and some 75 percent of Tunisians expect their economy to improve.

Table 1:
Responses to questions about economic conditions (percent of the population)

Tunisia

Egypt

Dissatisfied with the direction
the country is taking

78 percent

62 percent

Think that the current economic
conditions are bad

83 percent

76 percent

Feel that the country is worse off
after the departure of dictator

42 percent

30 percent

Source: Pew Research Center’s Global Attitudes Project. Tunisian data is from July 2012 and Egyptian data is from May 2013.

About 81 percent of Tunisians feel that corruption has increased either a lot or a little after the revolution.

Tunisians also believe that their government has failed to control corruption, which was a major revolutionary demand. About 81 percent of Tunisians feel that corruption has increased either a lot or a little after the revolution. This is higher than in Egypt, where 64 percent of those surveyed felt the same way (see table 2).

Table 2:
Perceptions about changes in corruption over the last two years (percent of population)

Tunisia

Egypt

Feel corruption has increased a lot

61 percent

37 percent

Feel corruption has increased a little

20 percent

27 percent

Feel corruption has stayed the same

14 percent

21 percent

Feel corruption has decreased a little

5 percent

11 percent

Feel corruption has decreased a lot

2 percent

5 percent

Source: Transparency International, Global Corruption Barometer, 2013

On the other hand, there are three major differences between Tunisia and Egypt. First, unlike the Muslim Brothers, Ennahda has not been governing alone. It is leading a coalition with two secular parties and therefore may not carry all the blame for negative economic results. The Egyptian secularist claim that the Muslim Brotherhood monopolized power and that President Morsi was an autocrat could not be easily transferred to Tunisia.

Second, the process of constitution writing in Tunisia has been long and has included a real debate between Islamist and secular members of the constituent assembly; both sides have been making concessions and accepting compromises. This is different from the Egyptian case, wherein the constitution was written in a hurry by an Islamist-dominated commission and approved through a referendum in which the turnout was less than 33 percent. Tunisians are eager for this process to conclude. Therefore, it is hard to see them supporting the creation of another assembly or commission which would start writing a new constitution from scratch (as is demanded by Tamarod).

Third, and perhaps most importantly, the Tunisian military is different than the Egyptian one, in that it does not have a history of political involvement. It is unlikely that the military in Tunisia will side with Tamarod and force the overthrow of the constituent assembly and the government.

The chances of Tamarod succeeding in turning Tunisia into another Egypt appear slim, at least for the time being. Things could change if the constituent assembly continues to delay agreement on a new constitution and a road map for elections and a stable government. This job was supposed to be completed some nine months ago, and Tunisians are starting to show signs of impatience.

In his speech last night President Morsi rejected opposition demands for early elections, as well as the military’s ultimatum to reach a compromise that is acceptable to the Egyptian street. He insisted that he is the legitimate president of Egypt and will complete his four-year term in office. Legitimacy was the main theme of his speech, and the word was repeated many times. The president went so far as to state that he is willing to sacrifice his life to protect this legitimacy.

Does this mean that the millions demonstrating in Tahrir and other squares all around Egypt do not respect legitimacy? That is not the way they see it. They argue that legitimacy is given to a president by his people. President Morsi failed to meet Egyptians’ expectations. In the absence of a parliament that can impeach the President, the people are impeaching him directly by going to the streets. The demonstrators believe that they, and not the president, represent true legitimacy in Egypt.

Those two arguments are difficult to reconcile. It is true that President Morsi’s performance has not been stellar. Opinion polls show that about 65 percent of Egyptians feel that their standard of living has declined during the year that he has been in office. This, at least partly, explains the popular anger directed at him. On the hand, it is also true that he is the first freely elected president in Egypt’s history and forcing him out of office before he completes his term sets a bad precedent. Moreover, he is supported by the powerful and well-organized Muslim Brotherhood who is also organizing pro-Morsi street demonstrations.

First, winning 51 percent of the popular vote does not provide a sufficient mandate to change a country’s identity. Important decisions on a country’s constitution and its national identity require a broad national consensus.

The way legitimacy is defined determines how one would assess the role of the military. The Muslim Brothers consider the military’s ultimatum to the President and their possible intervention as a “coup” against legitimacy. However, the demonstrators in Tahrir Square think that it is natural for the country’s military to take the side of its people. The Brotherhood believes that it is treason for the armed forces to move against their commander in chief, while the demonstrators in Tahrir believe that it would be treason for the Egyptian army not to support the Egyptian people.

What does all of this mean for Egypt’s future? There are at least three possible scenarios: (1) President Morsi could prevail and maintain all of his powers; (2) he could be forced to accept the military ultimatum and a transitional government is set to prepare for early elections; or, (3) the president and the military stick to their positions, resulting in a protracted struggle for power.

If the first scenario materializes and President Morsi remains in power, it would be suicidal to return to the status quo ante. It is important that he draw two lessons from the current crisis. First, winning 51 percent of the popular vote does not provide a sufficient mandate to change a country’s identity. Important decisions on a country’s constitution and its national identity require a broad national consensus. Second, Egyptians are suffering greatly from poverty, corruption and poor public services. Achieving inclusive growth and social justice should be the next government’s top priority.

Dr. Morsi’s defiant speech and his apparent refusal to respond to the demonstrators’ demands do not provide much cause for optimism.

If the army takes over control of the transition, either directly or indirectly (the second scenario), they should learn from the mistakes of the military council that ruled Egypt between February 2011 and June 2012. Two lessons could be drawn from this experience. First, consensus building takes time and patience. It was a mistake to rush parliamentary and presidential elections before reaching a national consensus on a constitution. Second, good economic performance is necessary for a successful transition to democracy. Economic management should be handed over to competent individuals and the military should not interfere with their decisions.

The third scenario is the most worrisome. It would be reminiscent of Algeria in 1992. A protracted struggle between the military and the Muslim Brothers could lead to thousands of victims, a long period of instability, and economic decline. Egypt’s democratic transition would be seriously compromised.

The Muslim Brotherhood, the opposition, and the military leadership have a historic responsibility to reach a compromise. At the presidential elections a year ago Egyptians were forced to choose between an inexperienced Islamist and a former general who was Mubarak’s last Prime Minister. They really had little choice, and the country is now paying for this. Today, the Egyptian people should not be forced to choose between an unacceptable status quo and protracted civil strife. Dr. Morsi’s defiant speech and his apparent refusal to respond to the demonstrators’ demands do not provide much cause for optimism.

Authors

In his speech last night President Morsi rejected opposition demands for early elections, as well as the military’s ultimatum to reach a compromise that is acceptable to the Egyptian street. He insisted that he is the legitimate president of Egypt and will complete his four-year term in office. Legitimacy was the main theme of his speech, and the word was repeated many times. The president went so far as to state that he is willing to sacrifice his life to protect this legitimacy.

Does this mean that the millions demonstrating in Tahrir and other squares all around Egypt do not respect legitimacy? That is not the way they see it. They argue that legitimacy is given to a president by his people. President Morsi failed to meet Egyptians’ expectations. In the absence of a parliament that can impeach the President, the people are impeaching him directly by going to the streets. The demonstrators believe that they, and not the president, represent true legitimacy in Egypt.

Those two arguments are difficult to reconcile. It is true that President Morsi’s performance has not been stellar. Opinion polls show that about 65 percent of Egyptians feel that their standard of living has declined during the year that he has been in office. This, at least partly, explains the popular anger directed at him. On the hand, it is also true that he is the first freely elected president in Egypt’s history and forcing him out of office before he completes his term sets a bad precedent. Moreover, he is supported by the powerful and well-organized Muslim Brotherhood who is also organizing pro-Morsi street demonstrations.

First, winning 51 percent of the popular vote does not provide a sufficient mandate to change a country’s identity. Important decisions on a country’s constitution and its national identity require a broad national consensus.

The way legitimacy is defined determines how one would assess the role of the military. The Muslim Brothers consider the military’s ultimatum to the President and their possible intervention as a “coup” against legitimacy. However, the demonstrators in Tahrir Square think that it is natural for the country’s military to take the side of its people. The Brotherhood believes that it is treason for the armed forces to move against their commander in chief, while the demonstrators in Tahrir believe that it would be treason for the Egyptian army not to support the Egyptian people.

What does all of this mean for Egypt’s future? There are at least three possible scenarios: (1) President Morsi could prevail and maintain all of his powers; (2) he could be forced to accept the military ultimatum and a transitional government is set to prepare for early elections; or, (3) the president and the military stick to their positions, resulting in a protracted struggle for power.

If the first scenario materializes and President Morsi remains in power, it would be suicidal to return to the status quo ante. It is important that he draw two lessons from the current crisis. First, winning 51 percent of the popular vote does not provide a sufficient mandate to change a country’s identity. Important decisions on a country’s constitution and its national identity require a broad national consensus. Second, Egyptians are suffering greatly from poverty, corruption and poor public services. Achieving inclusive growth and social justice should be the next government’s top priority.

Dr. Morsi’s defiant speech and his apparent refusal to respond to the demonstrators’ demands do not provide much cause for optimism.

If the army takes over control of the transition, either directly or indirectly (the second scenario), they should learn from the mistakes of the military council that ruled Egypt between February 2011 and June 2012. Two lessons could be drawn from this experience. First, consensus building takes time and patience. It was a mistake to rush parliamentary and presidential elections before reaching a national consensus on a constitution. Second, good economic performance is necessary for a successful transition to democracy. Economic management should be handed over to competent individuals and the military should not interfere with their decisions.

The third scenario is the most worrisome. It would be reminiscent of Algeria in 1992. A protracted struggle between the military and the Muslim Brothers could lead to thousands of victims, a long period of instability, and economic decline. Egypt’s democratic transition would be seriously compromised.

The Muslim Brotherhood, the opposition, and the military leadership have a historic responsibility to reach a compromise. At the presidential elections a year ago Egyptians were forced to choose between an inexperienced Islamist and a former general who was Mubarak’s last Prime Minister. They really had little choice, and the country is now paying for this. Today, the Egyptian people should not be forced to choose between an unacceptable status quo and protracted civil strife. Dr. Morsi’s defiant speech and his apparent refusal to respond to the demonstrators’ demands do not provide much cause for optimism.

Egypt appears to be in the midst of a second revolution. According to the military who were monitoring events, the crowds demonstrating around the country yesterday were “in the millions”. This is the same as the demonstrations that toppled the Mubarak regime. It is still hard to predict the final outcome, and whether this will lead to a step forward toward a stable democracy, or another step backwards toward chaos, violence and xenophobia, or a return to autocratic rule. Nevertheless, it seems quite likely that things will change, even if President Morsi remains in power.

Many western observers do not understand why Egyptians are rising against a president they elected freely only a year ago. Can’t they wait for him to complete his four-year term? This uprising became inevitable because the ruling Muslim Brotherhood has failed to respond to Egyptians’ aspirations for a better life and greater social justice. They let the economy deteriorate and people’s lives have become harder. They should have listened to former U.S. President Bill Clinton: “it is the economy, stupid.”

Of course many Egyptians have noneconomic grievances. They complain that the Muslim Brotherhood has monopolized power, and that the ruling party has passed an Islamist constitution which received support from less than a third of eligible voters. They entered into an open war with the judiciary, and appear determined to put it under their control. The Muslim Brotherhood has demonized Egypt’s media, and harassed them with lawsuits. Bassem Youssef, Egypt’s Jon Stewart, is being sued by Islamists claiming that he disrespected religion and the president. They attacked artists, and even fired the highly respected director of the Cairo Opera. They have created an atmosphere where extremist Sunni Muslims could spread hate messages against minority religions and sects. Four Egyptian Shia Muslims were lynched by Sunni extremists, a first in the country’s modern history.

Many of the millions demonstrating in Egypt’s streets are concerned about the Muslim Brotherhood’s threat to personal liberties and freedoms of expression and religion.

Many of the millions demonstrating in Egypt’s streets are concerned about the Muslim Brotherhood’s threat to personal liberties and freedoms of expression and religion. They feel that Egypt has traditionally been a tolerant Muslim country where different cultures and beliefs coexisted, and that the Muslim Brotherhood is trying to change Egypt’s identity.

However, polls indicate that those who are concerned with personal freedoms do not represent the majority of the population. They are a sizeable minority that is led by the “westernized” elite. The majority of Egyptians support Sharia. But as pointed out by opposition leader and Nobel Prize laureate Mohamed El-Baradei: “people cannot eat Sharia.”

The problem is economic. The more than 65 million Egyptians who live on $5 or less per day would not consider demonstrating on the streets to protect the Cairo opera house, or even to support the popular Bassem Youssef. However, they are revolting against the decline in their standards of living. This revolt could have been avoided if President Morsi and his government had made Egypt’s economy a priority.

Huge numbers of Egyptians believe that Morsi has failed as president. This is not because he is trying to infuse more religion into the public sphere. In fact, Egypt is a very conservative country, and religion is already very much in the public sphere. They believe that he is a failed president because he has done nothing to improve the daily lives of Egyptians. More young people are unemployed now than when he took office. Prices of necessities are higher. Bread lines are longer. Gasoline is scarcer. Power outages are more frequent. Corruption is on the rise. Insecurity is greater.

President Morsi and his government argue that all economic ills are the result of 30 years of mismanagement by the Mubarak regime, and that it is unfair to expect the Islamists to solve those deep-rooted problems in one year.

President Morsi and his government argue that all economic ills are the result of 30 years of mismanagement by the Mubarak regime, and that it is unfair to expect the Islamists to solve those deep-rooted problems in one year. They are partly right. Youth unemployment and corruption have been major problems in Egypt for many years. However, long lines for bread and fuel, and frequent power outages are relatively new phenomena.

Egyptians do not expect their government to perform miracles, but they do expect it to start tackling their problems. As a democratically-elected president, Morsi could have been more responsive to the electorate’s demands and needs. And there are many things that the Morsi government could have done. It could have put in place a nationwide program to support youth entrepreneurs. It could have expanded public works programs to provide temporary support to the unemployed. It could have started a partnership with civil society and the private sector to fight corruption. It could have reformed the fuel subsidy system to avoid shortages. It could have put in place a credible macro-stabilization program to attract foreign financing, and stop the downwards slide in the value of the Egyptian pound and the resulting rise in the prices of imported necessities.

The Morsi government has appeared incapable of dealing with Egypt’s economic problems. Egypt has had three different finance ministers in the span of one year. For the millions of poor and middle-class Egyptians life has become unbearable. And, there seems to be no hope in sight. That is why Egyptians are once again revolting. For most Egyptians, it is not a second revolution, but a continuation of the struggle that started in January 2011.

Authors

Egypt appears to be in the midst of a second revolution. According to the military who were monitoring events, the crowds demonstrating around the country yesterday were “in the millions”. This is the same as the demonstrations that toppled the Mubarak regime. It is still hard to predict the final outcome, and whether this will lead to a step forward toward a stable democracy, or another step backwards toward chaos, violence and xenophobia, or a return to autocratic rule. Nevertheless, it seems quite likely that things will change, even if President Morsi remains in power.

Many western observers do not understand why Egyptians are rising against a president they elected freely only a year ago. Can’t they wait for him to complete his four-year term? This uprising became inevitable because the ruling Muslim Brotherhood has failed to respond to Egyptians’ aspirations for a better life and greater social justice. They let the economy deteriorate and people’s lives have become harder. They should have listened to former U.S. President Bill Clinton: “it is the economy, stupid.”

Of course many Egyptians have noneconomic grievances. They complain that the Muslim Brotherhood has monopolized power, and that the ruling party has passed an Islamist constitution which received support from less than a third of eligible voters. They entered into an open war with the judiciary, and appear determined to put it under their control. The Muslim Brotherhood has demonized Egypt’s media, and harassed them with lawsuits. Bassem Youssef, Egypt’s Jon Stewart, is being sued by Islamists claiming that he disrespected religion and the president. They attacked artists, and even fired the highly respected director of the Cairo Opera. They have created an atmosphere where extremist Sunni Muslims could spread hate messages against minority religions and sects. Four Egyptian Shia Muslims were lynched by Sunni extremists, a first in the country’s modern history.

Many of the millions demonstrating in Egypt’s streets are concerned about the Muslim Brotherhood’s threat to personal liberties and freedoms of expression and religion.

Many of the millions demonstrating in Egypt’s streets are concerned about the Muslim Brotherhood’s threat to personal liberties and freedoms of expression and religion. They feel that Egypt has traditionally been a tolerant Muslim country where different cultures and beliefs coexisted, and that the Muslim Brotherhood is trying to change Egypt’s identity.

However, polls indicate that those who are concerned with personal freedoms do not represent the majority of the population. They are a sizeable minority that is led by the “westernized” elite. The majority of Egyptians support Sharia. But as pointed out by opposition leader and Nobel Prize laureate Mohamed El-Baradei: “people cannot eat Sharia.”

The problem is economic. The more than 65 million Egyptians who live on $5 or less per day would not consider demonstrating on the streets to protect the Cairo opera house, or even to support the popular Bassem Youssef. However, they are revolting against the decline in their standards of living. This revolt could have been avoided if President Morsi and his government had made Egypt’s economy a priority.

Huge numbers of Egyptians believe that Morsi has failed as president. This is not because he is trying to infuse more religion into the public sphere. In fact, Egypt is a very conservative country, and religion is already very much in the public sphere. They believe that he is a failed president because he has done nothing to improve the daily lives of Egyptians. More young people are unemployed now than when he took office. Prices of necessities are higher. Bread lines are longer. Gasoline is scarcer. Power outages are more frequent. Corruption is on the rise. Insecurity is greater.

President Morsi and his government argue that all economic ills are the result of 30 years of mismanagement by the Mubarak regime, and that it is unfair to expect the Islamists to solve those deep-rooted problems in one year.

President Morsi and his government argue that all economic ills are the result of 30 years of mismanagement by the Mubarak regime, and that it is unfair to expect the Islamists to solve those deep-rooted problems in one year. They are partly right. Youth unemployment and corruption have been major problems in Egypt for many years. However, long lines for bread and fuel, and frequent power outages are relatively new phenomena.

Egyptians do not expect their government to perform miracles, but they do expect it to start tackling their problems. As a democratically-elected president, Morsi could have been more responsive to the electorate’s demands and needs. And there are many things that the Morsi government could have done. It could have put in place a nationwide program to support youth entrepreneurs. It could have expanded public works programs to provide temporary support to the unemployed. It could have started a partnership with civil society and the private sector to fight corruption. It could have reformed the fuel subsidy system to avoid shortages. It could have put in place a credible macro-stabilization program to attract foreign financing, and stop the downwards slide in the value of the Egyptian pound and the resulting rise in the prices of imported necessities.

The Morsi government has appeared incapable of dealing with Egypt’s economic problems. Egypt has had three different finance ministers in the span of one year. For the millions of poor and middle-class Egyptians life has become unbearable. And, there seems to be no hope in sight. That is why Egyptians are once again revolting. For most Egyptians, it is not a second revolution, but a continuation of the struggle that started in January 2011.